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ChinaNet Online Holdings, Inc. (CNET) Message Board

mscrouse2001 7 posts  |  Last Activity: Jan 23, 2015 1:30 PM Member since: Feb 21, 2002
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  • Reply to

    iHeart Radio interview

    by mscrouse2001 Jan 19, 2015 8:40 AM
    mscrouse2001 mscrouse2001 Jan 23, 2015 1:30 PM Flag

    The link is https://www.youtube.com/watch?v=Ps2k4DVa9m8&feature=youtu.be

    I think the community pharmacy story is good if the acquisitions and financials work out. I am worried they might write down a legacy real estate investment in Q4.

    Sentiment: Buy

  • mscrouse2001 by mscrouse2001 Jan 19, 2015 8:40 AM Flag

    I thought the iHeart Radio interview was a good one. I recommend everyone listen to it if they can.

    Sentiment: Buy

  • Reply to

    Expect bad headline earnings for Q4

    by mscrouse2001 Jan 14, 2015 3:11 PM
    mscrouse2001 mscrouse2001 Jan 15, 2015 11:38 AM Flag

    Tangible book value is just book value minus goodwill and intangible assets. Nothing too fancy.

    Basically it is the financial value of what the firm owns. IMO, as business owners you guys should be tracking that number, it corresponds to the real assets of the firm.

    You can look at core earnings, but when they make an acquisition with a ton of goodwill that is money out the door. You can't just ignore that. They need to make a lot of incremental earnings to make up for that money out the door.

    So I think you should be tracking tangible book value per share over time as a sign of how good a steward the company is of your money. By the way, core earnings should correspond to change in tangible book value as long as they don't make an acquisition with a ton of goodwill.

    Seeing that tangible book value number drop tremendously along with earnings that are unimpressive, I'm not as enthusiastic as you guys regarding how management has done.

    I know Macau is bad and maybe I'm too critical, but it seems like they have blown through a lot of the company's assets with not much earnings to show for it.

    Hopefully, we get a downward adjustment on the contingent payment given the low turnover in December.

    Sentiment: Hold

  • Reply to

    Expect bad headline earnings for Q4

    by mscrouse2001 Jan 14, 2015 3:11 PM
    mscrouse2001 mscrouse2001 Jan 15, 2015 7:56 AM Flag

    Yes but tangible book value went from 113 million at the end of 2013 to roughly 58 million last quarter. This is after they raised a bunch of money in a rights offerings.

    However you justify it, this does not look like being a good steward of value. That money is gone and it is going to take a long to earn it back, particularly with the turnover we are seeing now, which seem lower than before the acquisitions.

    Sentiment: Hold

  • Reply to

    Expect bad headline earnings for Q4

    by mscrouse2001 Jan 14, 2015 3:11 PM
    mscrouse2001 mscrouse2001 Jan 14, 2015 9:53 PM Flag

    I liked your core earnings number. I came up with something similar, so it is nice to see that I'm not crazy. I am just frustrated seeing all these huge payments go out and disappointing earnings coming in. It feels like these transactions are sucking all the value out of the company. I am hoping this should reverse a bit this quarter and eventually peter out assuming they don't make a bunch more acquisitions, which I am afraid is a possibility.

    I know there is luck involved, but I figure if you are smart you set up only to pay bonus payments if you actually make money, so that you don't get a double whammy of losing money and paying huge incentive payments.

    Anyway, I wanted to get the possibility of a goodwill write-off out there. Give people a chance to sell in front of a possible bad headline earnings number. The company may not do it, but I'd put it better then even chance of a goodwill write off. If I were their accountants I would force them to do it.

    I also worry about bad debt. The DSO is increasing. Do you think they will manage that ok?

    Sentiment: Hold

  • Reply to

    Expect bad headline earnings for Q4

    by mscrouse2001 Jan 14, 2015 3:11 PM
    mscrouse2001 mscrouse2001 Jan 14, 2015 4:12 PM Flag

    Yes I think you do need to do a little more DD on the goodwill subject, but ok I'll go back to the Q2 call and listen to what they say.

    If acquisitions are performing well above expectations why is the following true:
    (a) stock near a 52 week low down well over 50% over the past year
    (b) huge drop in turnover
    (c) core earnings disappointing (let alone GAAP earnings which are terrible, reflecting the fact that either the company overpaid for its acquisitions or the core business is horrendous)
    (d) huge tangible book value decline

    Gee, I'd hate to see how the stock would be doing if the acquisitions were performing below expectations ;)

    With the slowdown in Macau, coupled with the stock price decline, coupled with the huge decline in book value, the auditors would have to be nuts not to push for a goodwill writedown. The stock market is obviously attributing no value to goodwill.

    I'm not trying to be a hater, just realistic. I am all in favor of not overextending credit. I want management to preserve book value, whether it is by prudent credit management or not going into dilutive deals.

    Sentiment: Hold

  • Given how bad Macau is and the disappointing earnings and revenues, I have to think that Q4 will have a big goodwill write off. These are usually reviewed for the annual financials and let's face it, the acquisition are not performing up to expectations.

    So if you are worried about headline earnings, you might want to consider selling now, because I think it could get very, very ugly.

    Since I attribute very little value to goodwill, I'm holding here. It seems like core earnings could be pretty decent for Q4 and maybe we get a little back on the contigent payments? ANd the stock is trading around tangible book with potential for buybacks and/or dividends. The long-term track record of management is not promising, however.

    Sentiment: Hold

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