When looking at the valuation of the Mercury deal you perhaps should not hope for an acquisition. There are dozens oft poorly capitalized solar installers out there so clearly nobody would pay a premium for a tiny company like RSOL with a measly below 1% market share.
sure - issuing convertible debentures at a 40% discount to current share prices is indeed a great way to build investor confidence.
So what are they trying to build ? Snapping up underperforming, non-growing little rat-shops using dubious financing methodes at the expense of shareholders doesn't look like a great deal rather than sham to me.
By the way: Did you find out about the "gross revenues" from the new IPC takeover press release ? They did not use that term last year. And this time they made no projection for next year either...
Yeah - they are pretty busy picking up tiny little rat-shops which most likely belong to former companions and old college buddies so everyone can make some money at the expense of bona FIDE shareholders. Clearly the company is something between sham and fraud trying to lure in new bagholders by using the most sexy buzz phrases for their business description. This has got nothing to do with software as a service subscriptions - it is just some rip off artists trying to create a hype without any substance behind it. Buyers beware.
even an uneducated investor should easily figure out that the company is designed solely for one purpose - to attract money by using red hot buzz phrases while indiscriminately collecting unattractive and sometimes even unrelated businesses which have one thing in common: they got nothing to do with cloud computing companies using a software as a service subscription business model. Their businesses are all low margin contract work and reselling agreements. Uninspiring and as far from the cloud as Microsoft from being the dominant player in the smartphone space.
this is no software / cloud company. Actually this is not even a company rather than an aggregation of completely separate and mostly even unrelated businesses somewhere at the very bottom of the cable / telco space which all have been acquired by generously issuing shares to the owners of that little rat-shops. The acquired businesses aren't growing either.
This whole thing is a sham designed to fill the pockets of Intercloud's senior management and their buddies who own(ed) the acquired businesses. I would bet the house that this will trade below $1 just twelve months from now.
I don't have any doubt that they will move on with their ponzi scheme as long as things don't go bust.
But it won't go on much longer as the fabricated hype will soon get the attention of professional shortsellers like Geo Investing or some smart Seekingalpha authors - there's been already one article out some days ago which put great pressure on this sham.
actually he was the CEO of red hot ISP biznessonline (Nasdaq: BIZZ) which had the same ultimately ill-fated "strategy" - acquiring weak businesses pretending to build a strong telco.
The company managed to go bust BEFORE even before the dotcom bubble bursted - since then the company was renamed several times until its remains were picked up by Birch Communications some years ago (which itself is a troubled undercapitalized telco).
after the failure he tried to run Broadmoor Capital Partners LLC a now equally defunct privat investment company through which he tried to unsecussfully ride the data protection hype some years ago.
and today he is trying to capitalize on the cloud buzzphrase by setting up another ill fated ponzi acquisition scheme which will be dead once it becomes clear that the numbers of the acquired businesses don't live up to initially communicated expectations.
1. RVLT didn't get a contract from the US Navy - the navy in fact bought some tube lamps from one of their local resellers
2. 17,000 2-and 4-foot tube lamps might amount to a $300.000 gross purchase value (if at all) with most of that money remaining with the reseller.
RSOL guided Mercury revenues to be just $18-20 mln for 2013 in its Q3 earnings release - but the fact that Mercury took nine months to generate just half of that revenue und will need a stellar Q4 to meet the projection made by RSOL might #$%$ investors.
Given the size of the revenue decline in 2013 it becomes quite clear WHY the company had to be sold and why the price appeared that low.
The merger proxy perhaps brought the disappointing business performance of the Mercury acquisition to the mind of investors and caused Friday's selloff
there is no government contract - a local reseller sold a large amount of tube lamps for a low six digit dollar amount - that's all
here we are on Monday morning - covering 30% of my position but clearly expecting this to break below $2 this week
they might feel defrauded my management regarding the Mercury acquisition
looking for clean break of $2 this morning
this has no growth potential - actually their organic growth rate is BELOW market and their acquisitions show hefty negative growth. The company has been in play because it has "solar" in its name and a Nasdaq listing. It doesn't make sense as an investment.
and a major win for me :-)
this has been in fact one of my best performers on the long and short side of things in 2013. I was long several times and short even more times and in most cases great gains were the result. Just like the current trade.