stock in the red as expected - very nice gain from after hours short here. Another great call.
"Arthur "Art" Krieg, M.D., has been named senior vice president and chief scientific officer. In this role, Dr. Krieg will lead the company’s drug discovery and early-stage research activities."
this seems to be a non-event here - mea culpa
if he would have been terminated for sexual harassment or fraudulent personal expense accounts the company would have pointed to issues "unrelated to the company's business". This is not the case here so I guess it has to do with the drug.
the loss is a non-issue as this is mainly dependent on marketing spending. The problem is indeed the poor revenue guidance and the projected cut in marketing spending which will lead to even lower customer and revenue growth.
With marketing spending projected to come down 50% qoq new user additions will be even lower than before - many analysts were scratching their heads about that announcement and asked management how to model FY16 estimates accordingly as 25% growth and substantially positive eps look illusive given today's announcement.
Even worse the company is looking to arrange a debt financing going forward so clearly internal cash flow projections must have been revised downward dramatically.
Investors get a double whammy of reduced revenue and earnings expectations AND some serious questions about the company to become a sustainable business from a cash flow perspective.
Ok - why not putting the company on the auction block here ? Clearly the company looks really cheap trading at just 1.5 times FY15 revenue estimates but the ongoing poor performance of the business and continuing cash needs might not attract too many buyers down here.
At this point the business model looks like being on the verge of failing so I would stay on the sidelines here despite the 20% after hours decline.
just take a look at the PE the shares are trading and you will soon realize that this is not a value investment as the shares look excessively overpriced at current levels. The company has been picked up as a high margin, high growth cloud services play and therefore analysts are looking for continued customer additions, international growth, increased arpu, low churn and so on. Eps can be lumpy quarter over quarter as marketing campaigns or sales force hires could put temporary pressure on the bottom line. So do yourself a big favor and read the cc transscript tomorrow and you will know what this is really all about.
nobody cares about the eps number here - listen to the conference call to get an impression what really matters to analysts. All important metrics came in in great shape so clearly I would expect the shares to trade up substantially tomorrow.
they just sold a huge amount of shares to the public a few months ago so I don't think they are going to buy them back anytime soon
"to more normal levels" - gross margin improvement won't hold going forward as some r&d expenses were simply pushed out. Would short the shares in after hours as management sounds cautious heading into 2015
fueled by cautious analyst commentary and perhaps one or two downgrades tomorrow. Management seemed completely incapable on the call. Analysts had many simple questions hoping for some clarity but management totally failed to answer just one of them correctly. Never have listened to a call like this before. CEO and CFO should be removed pretty soon.
driven by long-term institutional holders finally giving up on the company after two painfully weak quarters in a row. Yes, the company has fixed its balance sheet in the past few years (of course the unfunded pension obligations are still brutal) but revenues are still shrinking and the company is just one step away from becoming absoluteley meaningless in the IT world. Given the pension obligations a sale of the company wouldn't make any sense here so they have to turn around the ship on their own.
sure - they already bought some last quarter and this quarter but they will have to buy millions more to catch all those shares kicked out by institutionals. And they will be soon out of cash if they do so. Business and cash flows have been weak as of late so they won't bet the house here clearly
already placed the order at the beginning of the session while the call went from bad to ugly soon after that
good luck - institutions are giving up here finally. Another poor quarter and the stock will trade down to cash levels around $12
why ? he dramatically improved the balance sheet over the last few years and stabilized the company. Even IBM faces serious issues so it would be unfair to blame him for general changes in the market place.
clearly institutional investors are finally giving up on the company as evidenced by today's sell off. Would expect the shares to stay under pressure going forward. Sell.