Expect that a 33% loss in book value will soon translate to a 33% loss in stock price.
What's particularly interesting about today's announcement of a 21.5M writedown is that it tells us that
a) they overpaid for their recent acquisition,
'The Company believes that it will be required to record a goodwill impairment charge with respect to a goodwill asset of $12.5 million established in connection with the acquisition of a company in Europe.'
b) They no longer expect to be profitable for the forseable future therefore their accountants told them they can't expect to use their past losses against future gains,
'$4 million reduction in a deferred tax asset.'
c) This one is rich . . . pay the departing CEO of this perenially money-losing company 2.5M ! Shades of Merrill Lynch bonuses! BTW- what's the deal with 'other executives'?? Are other rats fleeing?
'$2.5 million reserve to be recorded on the Company's balance sheet for future termination costs associated with the departure of the Company's former CEO as well as other executives.'
d) Inventory is growing stale
'1.5 million provision for slow moving inventory will be required'
e) Ahoy captain! Deadbeat customers straight ahead! (count on this as a conservative estimate)
'increase its reserves for doubtful accounts by approximately $1 million.'
Count on the company that already lost 14c in the first nine months of '08 to really turn on the losses.
Given that Eastern Europe is a complete basketcase at this point, hanging by a thread hoping for an IMF rescue package, what are the odds of this order actually getting consumated?
Nil or 5%?
Magal Receives Orders for Approximately US$ 5 Million to Protect Dozens of Utility Sites in Eastern Europe
Monday December 8, 7:00 am ET
YAHUD, Israel, December 8 /PRNewswire-FirstCall/ -- Magal Security Systems, Ltd. (NASDAQ: MAGS; TASE: MAGS), today announced that it recently signed approximately US$ 5 million of contracts, to supply and install intrusion detection systems for dozens of utility facilities located in Eastern Europe. The systems will be supplied and installed during 2008 and 2009.
This turnkey project includes Magal's DTR-2000 Taut Wire Intrusion Detection System, combined with a Dual Technology Motion Sensor (Passive Infrared and Microwave), integrated by a Control Unit.
Mr. Izhar Dekel - CEO of Magal, said: "We have been active in Eastern Europe for a number of years and we believe that these orders confirm our reputation in this region and the satisfaction of our current customers with our security products and solutions. We see great potential in this emerging sensitive utility facilities market segment, which is now experiencing an increased demand for site protection and surveillance. Magal has the ability to combine various security systems into a turnkey project solution that best suits the challenging requirements of this market segment, and we expect that our market share will grow."
I would say the odds are just as good as this recently canceled project . . .
Press Release Source: Magal Security Systems Ltd
Magal Receives a US$20 Million Order for the Installation of a Municipal Surveillance Security Solution in a Large Latin American City
Wednesday September 3, 5:07 am ET
YAHUD, Israel, September 3 /PRNewswire-FirstCall/ -- Magal Security Systems, Ltd. (NASDAQ GMS: MAGS) (TASE: MAGS) announced today that its subsidiary Senstar-Stellar has received an order for the installation of a municipal surveillance security solution in a large city in Latin America, based on its FORTIS Command and Control System. The majority of the approximately US$20 million project will be completed during 2008.
This FORTIS System to be installed in this large Latin American city will integrate hundreds of cameras, emergency call units, and intelligent video analysis based on Magal's DreamBox, all connected to one unified command and control center operated by several security personnel during each shift. The FORTIS System, via a cellular network, will enable the command and control center to monitor, control and dispatch security alerts to approximately 150 patrol cars and fast-response forces, some equipped with cameras for bi-directional video transfer.