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PCTEL, Inc. Message Board

  • mawchek mawchek Mar 13, 2013 12:01 AM Flag

    TelWorx news out

    commandor, news of the accounting fraud perpetrated by former management at TelWorx indicates PCTI will write off a substantial part of their purchase price. Hopes are to recover assets from said management team. Thoughts? Might this be another buy opportunity?


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    • The more I think about it, the more I think we are being "gamed" for an LBO. If the stock languishes for a month or two-it would be ripe for an LBO a la DELL
      1)Cash/share after the 1st Q or 2nd Q will be $3.00 or about $54 million
      2)Net/net will be above $4.00/share
      3)If take company private, will get proceeds from PC secure or maybe PC Secure is commercially successful and keep all the upside
      4)May get income tax refund from TelWorX writeoff
      5)May get $3-5 million from former TelWorX owner

      In summation, after going private, mgt could get $10-$15 million for 3-5. That would go a long way to paying off some debt taken on with an LBO and it wouldn't change the business at all.

      Why I think this is because 3rd Q results were not changed and 4th Q guidance was not changed. That suggests to me that TelWorX is still generating sales at nearly expected levels.

    • Something larger may be at play. PCTI is not restating 3rd Q results. Perhaps this is part of a larger plan to take PCTI private. Today's news may get the stock down close to $6.00. Then, in few months, mgt may do an LBO under $9.00 vs w/o the "bad" news, they would have to have pay over $10.

    • Too bad! PCTI has done such a good job with other acquisitions. I'm not a buyer until my technical indicators suggest that whatever selling comes has washed out. What will be interesting will be guidance for the 1st Q and how much will sales be? That should tell us to what extent TelWorX "padded" their sales.

    • Commandor, your concern about Telworks accounting was right on. As a result, they will have to write off almost all of the purchase price it seems. I guess their earning will be inflated next quarter.

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