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Krispy Kreme Doughnuts, Inc. Message Board

hageneriksson 513 posts  |  Last Activity: 14 hours ago Member since: Oct 13, 2009
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  • The latest earnings were bad - really bad. The company continues to struggle with almost everything and there were no real improvements visible from an already very weak Q1. Gross margins dropped 4.1% qoq which is almost too bad to be true. Given the ongoing dismal performance of the company some investors obviously feared bankruptcy to become an short term option and sold out regardless of the price point.

    And while bankruptcy might very well be in the cards at some time going forward the company isn't there yet. Delia has a few million dollars of cash on hand coupled with more than $8 mln in restricted cash (supporting letters of credit). And they still have $16 mln available under the Salus Capital credit line.

    They also carry almost $30 million dollars of inventories on the balance sheet while bank debt and accounts payable stand at a combined $20 mln.

    At current prices the market cap of the company is just around $20 mln which clearly is a "left for dead" valuation especially when considering that the company has NO current or even medium term liquidity issues given the balance sheet and the huge credit line availability. Furthermore I would doubt that the activist investors involved with the company would give up on Delia even after some more poor quarters.

    Even more noticeable management guided for some improvement in Q3 on the call - and given the bombed out share price ANY kind of improvement in revenues or gross margins might trigger a huge rally in the shares.

    Even with another ugly quarter the company is not at risk of immediate bankruptcy so I guess the shares shouldn't drop much further anyway.

    Would expect the shares to recover most of their earnings related losses going into the Q3 earnings release in December.

  • hageneriksson by hageneriksson Oct 3, 2014 1:10 PM Flag

    another bad deal with Orbomed - company forced to sacrifice even more of potential future revenue streams just to stay afloat here. Obviously cash has been running dangerously low - AGAIN.

  • Reply to

    Again, EGHT just making the grade!

    by pmkhoopster Jul 23, 2014 5:15 PM
    hageneriksson hageneriksson Jul 23, 2014 6:04 PM Flag

    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.

  • hageneriksson hageneriksson Sep 11, 2014 2:00 PM Flag

    They were spot on GOMO and they put out a pretty detailed report on VNET which has months of field work in it so they clearly have some valid points here.

  • hageneriksson hageneriksson Sep 16, 2014 8:52 AM Flag

    yes - they are right - PIP is prevented from any kind of enforcement action under chapter 11 - same thing was done by the asbestos companies 20 years ago.

  • Reply to

    AT shareholders in panic mode

    by jewhoo3 Sep 16, 2014 10:46 AM
    hageneriksson hageneriksson Sep 16, 2014 1:03 PM Flag

    most shareholders remained in the stock because of the dividend - with this incentive mostly gone investors are moving on. I can't blame them. The stock is dead money at the very best but I wouldn't be surprised at all if this will undergo chapter 11 proceedings with two or three years from here.

  • Reply to

    Just hit ...

    by epb2840 Sep 23, 2014 7:35 AM
    hageneriksson hageneriksson Sep 23, 2014 8:39 AM Flag

    Great they waited until their stock has become almost worthless to do a mostly stock based deal. Looking at the CEO pictures the Nexage CEO can now refocus on heavy drinking obviously. Nexage is a shame of a company which has mostly worthless inventory in its exchange according to adexchanger.

    Analysts not impressed at all on the conference call with some questions about the cash cushion arising. "24 months" was managements' answer. So we are looking for CH11 at the end of 2016 at the very latest.

  • hageneriksson hageneriksson Sep 22, 2014 3:25 PM Flag

    as long as the current margin weakness persists the shares should be avoided at all costs

  • I feel pity for the buyers of the shares this morning

  • hageneriksson hageneriksson Oct 3, 2014 7:03 PM Flag

    Sure - they will do a reverse split after the rights offering is done to keep the listing - actually there's really nothing wrong about that. Until then they would easily get an exception from the NYSE.

    That said at the moment it is really not important for Standard General if the company has a NYSE listing or will be traded on the OTC as their investment will take years to play out. The $120 million equity injection won't be the last cash infusion as Radioshack easily burns triple that amount within a few months. After being diluted to 20% in the first step current shareholders will be diluted further beyond recognition as Standard General can easily dictate the price of new debt conversions.

    Current equity holders will soon own close to nothing of RadioShack while Standard General will most likely be at 99,9% within a few months. If they will be able to turn the company around they will stand to earn all the profits while current shareholders get nothing (or very very close to nothing).

  • hageneriksson hageneriksson Jul 24, 2014 8:09 AM Flag

    "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."

  • Reply to

    Again, EGHT just making the grade!

    by pmkhoopster Jul 23, 2014 5:15 PM
    hageneriksson hageneriksson Jul 23, 2014 6:59 PM Flag

    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.

  • "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

  • Reply to

    Earnings out - much better than Q1

    by loontrader Aug 28, 2014 6:38 AM
    hageneriksson hageneriksson Aug 28, 2014 8:00 AM Flag

    nonsense - company didn't deliver on its own shipment and especially margin guidance. All metrics have worsened compared to Q1 and guidance is for continued gross margin pressure going forward. There's no way the company will turn a profit in Q3 or even Q4. Would like to hear how they plan to address the upcoming convert maturity.

    VERY disappointing results and outlook - much worse than other companies in the sector when looking at the gross margins

  • Reply to

    wow - things get worse at UNIS

    by hageneriksson Oct 3, 2014 1:10 PM
    hageneriksson hageneriksson Oct 3, 2014 2:12 PM Flag

    There's no other reason why they had to go back to Orbimed sooner than expected and beg for more cash. They needed the cash BADLY and they needed it now. And they need even more as evidenced by another $10 mln they hope to get soon.

    And because they caught Orbimed by surprise they had to make further concessions which means they are sacrificing future potential revenue streams to Orbimed. I would love to learn about the details of the new concessions as they will be pretty substantial once again.

    The company remains uninvestable and with all potential future revenue streams already mortgaged to Orbimed there's little for shareholders to recover once they run out of cash sometime at the end of next year.

  • Reply to

    wow - things get worse at UNIS

    by hageneriksson Oct 3, 2014 1:10 PM
    hageneriksson hageneriksson Oct 3, 2014 2:06 PM Flag

    You must be joking - if they had ANYTHING to offer they wouldn't be forced to make even more concessions to Orbimed to get some much needed cash. This has been a bad deal from the beginning and now things have become even worse. What the hell does management do with all the cash they are burning so fast ???

  • Reply to

    Can anyone advice how the deal will be financed?

    by kolizacr Aug 1, 2014 1:28 PM
    hageneriksson hageneriksson Aug 1, 2014 5:18 PM Flag

    Management explained this in detail on the conference call - just listen to the replay of today's call - while financing clearly is not a problem the deal looks ill-fated as it was seemingly put together head over heels in light of the recent IGT takeout. Analysts on the call especially doubted the forecasted cost synergies and asked about potential FTC issues. Overall the deal recption was pretty lukewarm. Even worse management outright rejected to talk about the agreed breakup fee on the call and hinted to an upcoming SEC filing instead which won't be filed immediately.

    Bally shareholders should take their money and RUN fast as there's a high probability of the deal to fall through as already evidenced by today's trading action. Would outright short SGMS as they will be pressured by a seemingly very high breakup fee.

  • they should have filed for a bigger secondary - this will buy them just another year at best

  • Reply to

    100G product backlog

    by newtowntractor Aug 13, 2014 6:16 PM
    hageneriksson hageneriksson Aug 13, 2014 6:50 PM Flag

    Cash is down another $18 mln for the quarter and will continue to decline at this pace for at least two more quarters. Remarks about demand outstripping capacity is mainly a function of ramp up difficulties and very small current capacity. Further substantial investment is required to double output before year end.

    Analysts on the call clearly NOT buying the rosy picture yet. Many questions around the huge guide down for next quarter, the sale of the ultra-high-margin Japan business and another possible revenue step down for the December quarter.

    Would steer clear of the shares here and revisit the company after Q4 results.

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