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  • aaatiles aaatiles Apr 24, 2008 2:06 PM Flag

    Let's Be Careful

    I haven't listened to the audio of the conference call yet, but I hope at least ONE of the analysts (a pesky one who is not afraid of losing their job) asked the names of the top 5 lenders that took the place of SLM going forward. It certainly isn't BofA or Citi. Those two announced this week and last week they were pulling out of private student lending and focusing on federal student lending.

    Did anyone listen to the conference call? Did they discuss the recent quarter revenue breakdown by source?

    Did management comment on their book value of only $43 million and the 38% decrease in one quarter? Was management concerned at this equity deplection rate would the CPAs consider this a going-concern issue?


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    • attiles, I listened to the whole audio call. The CEO and CFO did their best to put a lipstick on their earnings report with the "gloss" that "enrollments continue to remain strong" and pretty much repeated about 80% of the headline info. that was supplied to the news wires this morning when the earnings announcement came up.

      Now, to address your questions:
      1.NO mention of the equity depletion.
      2. when they actually addressed the credit situation, both executives did their best to paint the picture that they are "actively looking for alternatives" to their credit sources, however, they didn't provide any specific names as to who these new financial sources will be.
      3. they provided NO guidance whatsoever as to the specifics of how the credit environment is affecting/will affect their enrollment metrics, but of course they are "reiterating they are comfortable that their range of $4.10 to $4.60 should cover/reflect all the uncertainties for the next year". Can you believe this? they cannot comment/give specifics on the metrics, but they are very "comfortable" that the guidance is still "in line." My question is: how can they be so sure that they will be able to succeed in replacing those financing sources? are they prepared to provide financing themselves? with what equity? to deadbeat/subprime students, nonetheless!!

      4. finally, the anaylysts were all wimps...some "congratulating" the company on a "great" quarter, and most of them just taking the company presentation at face value. NO real/challenging questions.
      so for now, IMO the charade continues...this typically happens to shady questions like ESI (remember Enron? Worldcom?) until they run out of rabbits in the hat, and then they get hit like a brick as the roof falls off.

      I bought October PUTs today, so I'm just waiting until they finally hang themselves in the next quarter or two.

      • 2 Replies to jeha68
      • I don't know your strike price but your options will probably expire worthless if 80 or less.
        By October, the credit situation will have improved along with the student loan bill going thou Congress that will be signed by Bush and giving further aid.
        By October Attiles will need to abandon the lack of finance BS and go back to those complaints that seem to always fall on deaf ears; too much charged per credit, diploma mill, no one hires ESI grads, etc.
        Meanwhile you will have taken the investment hit. Too Bad.
        BTW, care to give some time and sales info on those October puts in ESI?

      • yeah, some analysts. I listened to the last conference call, and NONE of the analysts questioned management's decision to keep buying shares in the open market in the face of a decreasing stock price OR their depleting equity from $90 million to $71 million at 12-31-07. They were fawning all over Modany and deferential, in my opinion. One analyst tried during the prior conference call to get specific and Modany shot her down.

        They are PAID to ask tough questions, but none of them seem to be able to do it. They don't seem unbiased at all. If they have one less company to analyze [ie, ESI goes bankrupt since that is what happens when a company's liabilities exceed its assets, which ESI is closely approaching], their job it that much less important.

        In other words, management is saying that they don't have any lenders in place RIGHT NOW [but hope to in the second quarter, which is, as of today, 60% over] to replace private lending from SLM that discontinued 2/28/08.

        Does everyone READ that? Herd mentality.

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