If RB4 does turn out to be a big hit with demand outstripping supply nearer the Holidays, I hope the bumbling CEO is smart enough to direct product to retailers who agree to 'bundle" a few other popular Madcatz products. Were they to come up with a 20 unit pallet of say, 5 Tritton headsets, 5 gaming mice, 5 fight sticks and 5 whatever to use as an incentive, they could very effectively cross-sell. Each product would be priced allowing the retailer to make a nice margin. I am in retail and it is very common for our wholesalers and jobbers to ask us to add on a few other items and not just "cherry-pick" the main item we are looking to buy. We realize that everyone has to make money, and as long as they are sending me a solid product I can easily sell at a good margin, I am happy to do so to assure the delivery of the product I really want, especially when the market is tight.
Dback, I strongly suggest we all do exactly what you just said. And this could serve as a test vote for a future bad conversion deal for us U.S. shareholders. I have read for months (and doubted it) that we have enough votes to override a bad deal. Well, this is our chance to see if that is indeed true. There cannot be a single member of this message board who is happy with the job of this BOD. This is our chance to tell them we are tired of being blown off and screwed by their incompetence. It is time to send a loud and clear message to SJ/SK. Vote no on all their nominees. Enough is enough.
As it turns out, while everyone was in Vegas 18 months ago .patting themselves on the back for their great fortune, they should have been in the bathroom stalls selling their entire position and buying Apple or Skyworks, two companies with management who KNOW how to get things done.
First, the company needs to immediately increase the buyout amount. Then, they need to confirm that they can begin the purchases 3 days after the earnings announcement. There is no additional 30 days required. It is absolutely unacceptable that the IMOS shareholders can be held hostage like this when it is OUR money being held in Bermuda.
Did anyone see the news today on NTP? Namtai, a Chinese company formally in the tech space trading on the NYSE. They coverted to a real estate play a couple years back. Today they did two things. First, they announced earnings. Second, they announced a tender offer to buy back 15M of their shares at a 10% premium to their stock price. And guess what? It commences TODAY and expires in a month. Of course, the stock immediately rallied 10% to the offering price.
Management explained that they felt their stock was undervalued and misunderstood and decided to show their faith. They moved QUICKLY and DECISIVELY and FEARLESSLY. Imagine that.
Yes, eventually they will do something, Turt. But just what that something will be has me more and more concerned. Everything so far has been to the benefit of the 8150 holders. Why not more of that? And please don't anybody say because we have the votes. Clearly our biggest institutional holders don't have the sack to ruffle feathers, or they would have done it by now. What was it, a year ago when the big meetings were held in NY where they had their say? That worked out real well.
Using Turtle Beach as a guide, if Rockband 4 is only a moderate success, Madcatz will be worth above $2 in 6 months. Getting little play here is the fact that RB4 is far from a one Holiday fad. This franchise will have legs, as PS4 and XB1 are still very early in their lifecycles. I would expect a new keyboard next year, in addition to other add-ons if the game performs well this holiday.
Using TB as a guide, they did around $25M a quarter in the past year and spiked up to about $90M in the holiday quarter. And had significant operating losses. Their margins are lousy, and their operating expenses are far too high. Their balance sheet at year-end had $7M in cash and $40M in short and long term debt.
As RB4 kicks off, Madcatz' financials will compare very favorably to TB. Even if sales are a bit lighter, MCZ has far better expense controls and far less debt. Madcatz will slightly out-perform TB in gross margins. TB's stock has been a barking dog, hovering around $2 a share, down from over $9 in the past year.
IF Madcatz finally executes, its stock price is a screaming buy.
Correction. They "WERE" a going concern.
Because of the tight restrictions of the Wells Fargo agreement.
That agreement has now been replaced by a much larger, more flexible agreement.
Very smart of the company to report both news events at once, as the second makes the first moot.
Last impediment out of the way. Full steam ahead.
While it is great news that the bumbling CEO confirmed that the launch is on schedule, guided towards RB4 revenue in the current quarter and that early orders were outpacing RB3, I was even more pleased at another comment he made.
Many on this board seem to refer to RB4 as a one-hit, one-year wonder, but previous versions of the franchise sold millions of copies over several years. And the bumbling CEO went out of his way to mention RB4 in the framework of a key driver for Madcatz over the next 3-4 years. While I certainly do not intend to hold the stock that long, if this franchise can keep the company consistently profitable and liquid for multiple years, the stock price will clearly benefit. While I will never subscribe to Uptab's ludicrous pie-in-the-sky predictions, I can easily see a company earning .15 a year with a 15 multiple garnering a stock price in the $2-3 range.
That tells me there just aren't that many sellers. As word spreads about this RB4 opportunuty, new buyers are going to have a hard time building a position without driving up the price.
Recent information from the RB Twitter feed is that standalone guitars will be available after the new year and that something is in the works for cymbals! 2016 will certainly bring a new keyboard and other surprises. RB4 will repeat RB3 as a solid 3-4 year performer.
Hope, there are two very valid reasons.
First, that DR has ZERO credibility due to his many past failures and consistent lack of execution.
Second, anyone with any math skills can figure out that even $80M in RB revenues with 20% margins will require $64M to manufacture the product. At present, Madcatz has nowhere near that kind of cash on hand OR credit line to pull that off. So until they directly address that issue, the stock goes nowhere. That is the ONLY question that needs asked at the upcoming conference call, yet I have no faith that any of the lame analysts will ask it.
Mary, in five weeks SPDC will announce q1 earnings. No charges, no writedowns, no surprises.
Sales of $30-40M, ebitda of $3-4M, and a small loss due to interest expense. The stock will go up that day, and from a higher base than today.
Was in a Best Buy today. Gaming manager told me RB was getting more hype than GH from customers. Also he pulled up the GH Live on the computer for pre-orders and it showed available Oct 20, two weeks after RB. If RB is not delayed. Madcatz needs to hit this deadline and show all that its execution issues are in the past. Next critical step is to be in the sale circulars for Black Friday and have ample inventory in the stores.
Hopefully Novatek, their biggest customer, is a better indicator. They were up 4.4% month over month. Plus, the long-rumored Toshiba business HAS to start showing up soon.
I'll go with $55M, up about 2% over May.
Come on, Oil. The chips have to be paid for whether they are made in house or fabbed out. The end buyer such as Apple or LG are going to get much better terms from PXLW. So PXLW contracts the work out, pays for the chips, delivers them to the end user, then gets paid itself in 30-90 days, but likely books them as revenue when shipped per SEC revenue recognition rules.
Number of shares and price will likely be out in the morning, but most Roth deals are at about a 10% price discount. The S3 was filed last August and declared effective last September with a max of $50M. Let's hope for no more than about 5M shares at $5, or about $25M.
Coffee, the SEC rule is very simple and strict. If an insider, officer or employee is privy to material information that has not been disclosed publically, they are strictly prohibited from trading on that information. "Material" would include such things as earnings, new product announcements, new customers, lost customers, negotiations for a sale of the company or the purchase of a new entity, etc.
Clearly an example of this would be their knowldege before the Rockband 4 announcement. Management knew it was coming, but were unable to buy stock because of that knowledge. Currently, I would think that them having specific numbers on RB4 pre-orders would be material. Even though DR stated on the call that pre-orders were strong and above RB3 numbers, he knows EXACTLY what they are, as well as the dates and plans for standalone accessories, new sku additions, etc. This publically non-disclosed info would prevent them from buying.
BTW, it's nice to finally have Fuddy on our side of the trade after reading all his bashing the past couple years :)
Joey, there would be no need to pre-order the disc alone. They can be mass-produced quickly and cheaply. They will be readily available at retail whenever Madcatz and Harmonix decide they WANT them available.
Sean, the 60 days is the approximate total of days after the buyback announcement. 30 from that day until earnings, and another "phantom" 30 after earnings from Frick and Frack. Mid-September. Utterly ridiculous. Please, Mr. Shannon, drill down on that point tomorrow.
We really need to have that buyback ready to go asap because chances are they guide weaker for q3 tomorrow. Seems everyone else in the space has.
They also need to be asked about the Typhoon. Nearly 4M homes and businesses lost power and we need to know if there was/is any business disruption.
Harmonix had very specific language in the contract. Madcatz had to have x amount (redacted) of each sku manufactured and ready to ship by specific dates. If they failed to execute, Harmonix had the right to void the agreement and/or use an additional supplier to fill the order. Probably due to past execution issues, Harmonix made very sure to protect its investment. And with the overall weakness in the MCZ business, it allowed them to focus their manufacturing on the Rockband products.