I understand the recent decision to suspend the bu back of shares to conserve cash due to the fall off in sales rate and the fiscal bleeding until the ship is righted. I do however wonder if there is another approach. Given the continued decline in stock price there is in my opinion an opportunity to buy a perhaps up to a million shares back at quite attractive prices. Doing so would create a much more advantageous environment for future E.P.S. and valuation growth with 10% fewer shares in the float.
To accomplish this without making bet your company types of decisions would require a combination of buy-backs (just very opportunistically -not chasing shares) with more aggressive cost containment measures and less R&D expense and a recognition that growing to $250 MM in sales for the sake of being bigger probably will not generate the type of return that shareholders are looking for.
While that type of growth may be good for management egos and salaries because they are compared with a different "class" of managers it does not necessarily lead to a more profitable company or better returns. - After all it's not what you make -but rather what you can keep that counts.
Building on solid foundations is key and restructurings are typically cash flow intensive. While I'd love them to buy back more equity the share price wouldnt be this low if they were capable of loading the boat. I think if they can get their house in order they will have plenty of opportunity to buy back below book. I've basically put this in the 2-3 year turnaround category now.
Beyond what I've said above I totally agree with your thoughts. I do have a couple of questions:
1. What "whistleblowing" was Verfueth referring to in his board resignation letter? It may have been sour grapes, given that he was the CEO, but sometimes these issues just create management headaches
2. Verfueth owned over 7% of the outstanding shares, I wonder with his resignation from the board whether he's contributing to the decline.
I would think that they could afford to buy back at least a couple hundred thousand shares at $1.25 or less.... maybe a million or more. That would still make a significant dent in the number of shares in the float.