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Formula Systems (1985) (FORTY) Message Board

fujigrower 10 posts  |  Last Activity: Feb 26, 2015 4:05 PM Member since: Jul 11, 1998
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  • fujigrower fujigrower Feb 26, 2015 4:05 PM Flag

    Sofala,

    Keeping an extra $5 million on hand in case a small acquisition or business expansion opportunity emerges makes sense. What doesn't make sense is stockpiling $26+ million (and growing) to make a large acquisition. Same with leaving $26 million stuck in a money market earning next-to-nothing for shareholders.

    With tight focus and disciplined execution BSquare can continue generating profitability, positive cash flow and shareholder value. If DataV begins generating traction and MobileV continues to ramp, then the outlook gets even brighter.

    Fujigrower

  • fujigrower fujigrower Feb 26, 2015 2:19 PM Flag

    "Those who do not learn from history are doomed to repeat it."

    Over the past ten years BSquare's Board of Directors burned $30+ million in shareholder cash pursuing failed new initiatives and acquisitions... all of which were confidently touted as brilliant business ideas that would ramp revenues, margins and profitability. The list includes:
    Acquiring TestQuest (oops)
    Pivoting to the TestQuest Handset Certification Program (oops)
    Opening the China office (oops)
    Opening the Korea office (oops)
    The MCP Data acquisition (oops)
    Expanding MSFT 3rd party software sales to Europe (oops)
    The OLAP agreement with Texas Instruments (oops)

    These initiatives all incinerated shareholder cash but even worse, diverted the staff and leadership team's focus from BSQR's core business, including the Ford program (oops), Coke (oops), Engineering Services revenues (oops) and Engineering Services margins (oops).

    BSQR's staff and investors paid a heavy price for these strategic mistakes.

    Jerry Chase has done exactly what he said he would do. Focus on BSquare's core business lines and returning them to profitability. He also said he could fund new product development (MobileV, DataV) while maintaining profitability. He has done that successfully.

    The idea BSquare executives should now go out shopping for a $10 to $15 million acquisition is nuts. Focus is a huge competitive edge. Don't repeat past mistakes.

    If MobileV and DataV have tremendous potential, and I believe they do, Chase & team can develop that software in-house... and without burning $15+ million in cash.

    And without a $15 million acquisition, a solid shareholder dividend makes far more sense than earning shareholders 1/4 of 1%. In 15+ years as a publicly traded company BSquare has never returned a dime to shareholders. Its time for that to change.

    Good luck to everyone.

    Fujigrower

  • While no longer an LTRX shareholder, I still follow the company and root for a successful turnaround.

    The long wait for LTRX revenue growth and GAAP profitability is understandably frustrating. That said, if any large shareholder starts thinking about a CEO change, they risk repeating the error that put Lantronix into this deep hole.

    Jerry Chase and Kurt Busch are not genius level CEO's. Any business executive who is would be at Google... not Lantronix. Both are smart, experienced and competent business leaders. Chase took the helm of a floundering LTRX and stabilized it... just before the global economy and electronics industry imploded in 2008 - 2009.

    Kurt took the smoldering pile of ashes that remained after Bernhard's $5+ million internal investigation and began rebuilding. In staff, products and confidence he's made impressive progress. The expected revenue growth and GAAP profitability have not emerged... yet.

    Was Chase a good leader? He was appointed CEO at a floundering BSquare in September of 2013, immediately right sized the staff, rebuilt the leadership team, returned the company to positive cash flow and since posted 3+ consecutive quarters of GAP profits and revenue growth. The share price is up an impressive 70%.

    I am not suggesting Jerry is a better leader than Kurt. I am suggesting changing CEO's won't solve the the core LTRX problem. It has been the same for a decade. Lantronix is too small to be a publicly traded company.

    In that decade the company burned $20+ million in publicly traded company expenses. The "distraction" cost likely higher. with leaders and staff under the wilting Wall Street microscope every 90 days. How much equity has this business model generated for LTRX shareholders?

    From my view out in the left field bleachers, the best option is to find the right acquirer and wrap the LTRX team under a larger, financially stronger umbrella. The staff will get stability. Shareholders get cash. Done.

  • fujigrower by fujigrower Feb 19, 2015 9:02 PM Flag

    In Q4 and 2014 as a whole Jerry Chase's team delivered impressive step-by-step progress in a long awaited BSQR turnaround. Three consecutive quarters of GAAP profitability. Google emerging as a major customer. $1+ million in MobileV revenues recognized in Q4. The 3rd party software team generating a successful new product. An effective executive leadership team working in sync. $5+ million in cash generated in 2014. And a share price up 50%+ since Chase took the helm.

    Nicely done.

    Jerry Chase's quiet, "under-promise and over-deliver" style on the conference call is also refreshing. His remarks are thoughtful, direct and concise.

    Shareholder thanks and congratulations to the BSQR team. You have a lot to be proud of.

    Good luck to everyone.

    Fujigrower

  • Reply to

    Three Lessons from Real Madrid...

    by fujigrower Dec 21, 2014 9:32 AM
    fujigrower fujigrower Dec 22, 2014 9:48 PM Flag

    Flying,

    Click doesn't need a high profile "gun slinger" as their next generation CEO. The do need a younger leader, either promoted from within or hired from the outside, with a proven ability to build strong teams and execute.

    In my opinion the right next generation CEO will both improve the company's current operational performance and increase its attractiveness and value as an acquisition.

    Who the right next generation leader might be I have no clue.

    As Chairman Moshe can continue providing valuable strategic guidance and communicate with investors. What he would not do and should not be at age 67, is trying to run Click's entire organization as CEO.

    Fujigrower

  • Reply to

    Three Lessons from Real Madrid...

    by fujigrower Dec 21, 2014 9:32 AM
    fujigrower fujigrower Dec 21, 2014 10:32 PM Flag

    Gunner,

    Our view may differ on Real Madrid developing talent but we probably agree on four things:

    a). Click needs a next generation CEO.

    b) With a strong recurring revenue stream Click should be making money left and right.

    c). Click should be a strong takeover candidate... but has been for 5+ years.

    d). An acquisition price will be higher, however, if Click has a talented next generation CEO at the helm with an up-and-coming leadership team. Strong next generation leaders add value to any company being acquired. A 67 year old CEO, no matter how many options they have issued themselves or how many times they have spotlighted themselves in press releases, generates legitimate concern over how strong the second tier leaders are and who will run the company after the acquisition.

    Fujigrower

  • In winning the Club World Cup Final yesterday Real Madrid extend their remarkable winning streak to 22 games.

    At $7.20, only slightly higher than in June of 2009, Click shares are not on a winning streak. There are a few lessons Moshe might learn from Real Madrid.

    a). Real Madrid would not send out a 67 year old player at mid-fielder... no matter how talented he was earlier in his career. The incredibly fast pace and fiercely competitive playing field make soccer, like the cutting edge field of mobility, a younger persons game.

    b). Recognizing strong teams win games, Real Madrid invests aggressively in signing and then developing next-generation players. They would not, for example, issue a 67 year old player the highest salary (or in Click's case, the largest salary + pile of options) because he had played the longest time.

    c). Real Madrid would not emulate Click by spotlighting their oldest player in every press release. That would raise concern that if that player retires (something many soccer players do at age 67) or gets hurt, the team doesn't have strong enough players behind him. In the case of Click, that concern undermines investor confidence (see $7.20 per share) and the perception of Click's acquisition value (see $7.20 per share).

    I don't cheer for Real Madrid but was perhaps Click's most rabid fan for over a decade. Few investors are more appreciative of Moshe's persistence and leadership in the Click turnaround ten years ago. Few investors have been more disappointed watching him repeat three fundamental leadership mistakes over the past five.

    -Continuing to serve as CEO rather than transitioning to Chairman.

    -Issuing himself 100,000 more options rather than distributing them to next generation Click leaders.

    -Spotlighting himself in the vast majority of press releases rather than highlighting next generation Click leaders.

    Good luck to everyone.

    Fujigrower

  • Reply to

    Actions speak louder...

    by fujigrower Nov 23, 2014 12:28 PM
    fujigrower fujigrower Dec 7, 2014 10:10 AM Flag

    In my opinion a dividend or a share repurchase program are two intelligent options for redeploying cash.

    Continuing to sit on $15+ million in excess cash in money market funds earning shareholders perhaps 1/2 of 1% interest each year is just dumb. Shareholders can do far better themselves.

    Shareholders worst nightmare, however, is if Directors have a sudden memory lapse and use the excess cash to go "acquisition shopping." There is a difference between basic blocking and tackling, something BSquare still needs to prove it can execute on a consistent basis, and going on an expensive and distracting shopping spree.

  • Reply to

    Director bus 10,000 shares

    by sofala1122 Dec 3, 2014 9:17 AM
    fujigrower fujigrower Dec 5, 2014 9:28 AM Flag

    Regarding my comment about weak leadership from BSQR Directors, a friend correctly reminded me that while leading BSquare's turnaround as CEO, serving as Chairman and then as a Director Don Bibeault bought 200,000+ BSQR shares and held them long term. That is "actions speak louder than words" leadership.

    Bibeault was also the one Director who emphasized the need for the company to generate consistent profitability as priority #1. Long term shareholders wish other Directors had followed his advice rather than chasing the series of "exciting new revenue growth opportunities" that burned through BSquare's cash, credibility and shareholder value.

    Throughout his career as a turnaround specialist Don Bibeault 's top priorities were generating profitability and building shareholder value. Jerry Chase and the new Directors appear to be steering BSquare back toward those old fashioned business values.

    Good luck to everyone.

    Fujigrower

  • Reply to

    Director bus 10,000 shares

    by sofala1122 Dec 3, 2014 9:17 AM
    fujigrower fujigrower Dec 3, 2014 10:30 PM Flag

    For over a decade, "Do as I say, Not as I do," leadership from BSquare's Directors eroded confidence from investors and morale in the staff.

    It is delightful to see Harrell Kodesh put his own money on the line with shareholders and demonstrate his confidence in the staff and business plan.

    His actions speak louder than words.

    Fujigrower

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