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Tangoe, Inc. Message Board

  • quinton_larry quinton_larry Aug 28, 2012 10:45 PM Flag

    ***TNGO you have no edge****


    You have no edge trading TNGO. Look what happened....

    Get and find an edge.

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    • No joke

    • Shockwr

    • Learn people

    • Good comments from all of you. While I am not a booster for TNGO or any other stock. I do believe that an opportunity exists here for profit. The shorts can not be happy, TNGO rallied today after dropped nearly 17% yesterday. A falling knife rarely reverses coarse, rising, and then subsequently falling again. The shorts led by Street Sweeper, who bought 122,733 short shares before publishing their negative commentary, obviously are financially motivated to have the stock tank.

      I have read the Street Sweeper analysis and find it interesting, but unbalanced. For over a decade, I was CEO of a Technology company that was acquired in 2011. While not a competitor of TNGO, our firm participated in the Mobile an Wireline, Carrier and Enterprise market. I do have some knowledge of this space. Street Sweeper takes TNGO to task for supplimenting internal growth with costly acquisitions, increasing their reliance on recurring revenue business, rather than "new sales", suspect financials, and a mnagement team lacking credibility. Let me examine the charges one by one.

      My own experience suggests that strategic acquisitions that consolidate market share, or expand to complimentary adjacent markets, can be a strong revenue accelerant to organic growth. TNGO has demonstrated to date, that by keeping margins high and growing revenue, shareholders are being rewarded, not diluted by the company's acquisitions.The key is buying at the right price that will be accretive within a year or less. Secondly, recurring revenue or subscription business is very positive for a company, unless it is a loss leader. Subscriptions typically provide four advantages: Margins are higher; Forward revenue visibility is enhanced; The cost of growing the business with existing accounts is much lower than winning new customers; Selling additional services around a product or software platform increases value for the customers and adds stickiness.

      Street Sweeper also questions the integrity of the company's' financial reporting and auditing oversight. Fraud, while not impossible, is much more difficult than many imagine. The US is not China, US auditing firms operate within Generally Approved Accounting Practices with oversight by the Financial Accounting Standards Board. Detailed quarterly and annual reports are submitted to the Securities and Exchange Commission. TNGO is followed by seven brokerage firms, including Deutche Bank, Stifel, Oppenheimer, Wunderluch, Barclays...all with Buy/Outperform recommendations, some reaffirmed or initiated this week. While I do not personally know the CEO or CFO, I do know many of the analysts at these firms. They combine extensive domain expertise in TNGO's market with financial analytical skills, supplemented by first hand ongoing discussions with the TNGO's customers, partners, and competitors. These analysts live and die by their reputations and accuracy. They will turn on a company or management team very quickly if fraud is suspected or company financial reporting is in question.

      The last and perhaps most important deterrent to bad actors is the recognition that financial reports must be personally signed by the company's CEO, Principal Accounting Officer, with a compliance letter from the outside auditor. No CEO or CAO wants an unfriendly room mate at a federal pen.The ghosts of Bernie Ebbers ( Worldcomm), Jeff Skilling ( Enron ) are very real.

      In summary, I have no problem with Street Sweeper very clearly stating that they have a strong financial interest in driving the stock of TNGO lower and are presenting an advocacy document to promote this result. Their analysis relies on information already publicly available, draws questionable conclusions, and is disputed by industry experts at reputable brokerage firms. Deutche Bank reiterated this morning that this is a good entry point to buy TNGO.

      • 2 Replies to crkenmore
      • 16 was the low and today should be a huge run in the other direction +++ !

      • ...but the company only has 50% GM% and $22MM in EBITDA, with organic growth 15%-20% this does not command a 4x revenue multiple, it should get a range of 10x-15x EBITDA which at best gives you $220MM - $330MM valuation plus $30MM net cash = $250 - $360MM / 42MM shares = $6 - $8.50 per share, less than 1/2 where it is trading. That's it. Game over, this doesn't need fraud to get cut in 1/2. But where there is smoke there is fire. Bad management will always be bad management if they did it in the past they could do it again in the present. As for investment banking analysts being reputable, come on man, they're paid shills they could care less about where the stock goes they care about their fees paid to them by TNGO.

    • denniscotten Aug 29, 2012 3:29 PM Flag

      I don't mind

    • sexyyyy

    • well said

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