They will ultimately have to dodge probably more than one de-listing challenge and have given zero disclosure to shareholders as to the game plan or next step. Why would any serious executive consider taking a position running company that has been moribund for nearly seven years, especially into the teeth of a global manufacturing recession? The only reason the former CEO was in place was likely his significant share ownership in the company. Failing sale of the entire company, there is a decent chance that his equity and that of the Case family zeroes out. Sales to China could fall to a deminimus level, after having been nearly halved. The strong dollar will restrict almost all other foreign sales to modest levels. The U.S. has been in a manufacturing recession for months. Venezuela and Brazil and Argentina are close to bankrupt --so it is no surprise the S. American market for meter sales is comatose. Extrapolating the negative net cash flow from operations fiscal year-to-date would have the company out of cash in a little over a year. Depending on the length of the current global manufacturing recession, the post mortem could be held by mid-2017. The stock sells for less than its net working capital, but still is hardly cheap. It might be wise to drill down on the inventory valuation given collapsing sales to China and the severing of a Latin American distributor for Xact. Xact has been just one window into the failure of the entire company over the last half decade, but it epitomizes the ongoing trouble at the company.
just announced. Feel a cold stack on the idle rig coming before much longer. That's the right thing to do. Stock would be cheap below $3 U.S. and perhaps worth a small initial stake for long term holders. Would never want it to be over 1% or 2% of an overall portfolio however. It's still not the cheapest stock in the universe, but at $2 and change it would be reasonable as a very small speculative bet that the Saudis could yield sometime in 2018.
Expect SMIT to cut remuneration, head count, and possibly lower margin product lines to cleave close to operating cash flow breakeven over the next several years and attempt to weather the storm w/its clean Balance Sheet. Growing the business has not been and will not be an option for the foreseeable future.
They should have removed the Board when they had the chance, but you can't tell institutions anything. Very few are really truly activist. Easier just to be resigned. They will ride it all the way down.
after the cutbacks to senior management pay and allowing for Fed, Oregon State, Soc. Sec. and Medicare Taxes. What is worse, no increases are likely for a while, and any promotion from within would not be much of a carrot. Beyond daily living expenses it will challening for any employee to adequately fund retirement, college expenses or even a nice annual vacation if they are a sole earner. So while labor, raw material and energy costs are not a worry at all---company morale might well be. Can't be much fun getting out of bed to go to work on Monday morning even w/o considering the uncertainty that overhangs the company's future. A Dead end/sword of Damocles work environment tends to be less than uplifitng, not mention nearly all outstanding stock options are virtuallly worthless. Sheesh, just sell the company or take it private and save another few hundred thousand dollars vs. the cost of remaining public.
whether it is exploring strategic alternatives, head count reduction, pruning low margin product lines, exiting China, hiring a new CEO, moves to further lower the breakeven point and adjust the cost structure, etc. In a vacuum both shareholders and employees (w/resumes at the ready) are going to walk. And they are going to walk soon. It is not only the overhanging volume of stock that is nervous over the current uncertainty that matters. It is also also the marginal seller who will impact share price as buyers will remained sidelined and "on strike" until more disclosure is offered. In an illiquid stock such as this a mere 50,000-100,000 nervous shares sold at the margin w/no active buyers could sink the stock to the low $1s. The company better lay out its plan very soon or they will have to also consider how to deal w/ a de-listing action. Lots of stock for sale on the Ask. That will remain the case until the company discloses what its plan is. The fuse burns quickly here. To avoid an equity wipe out they need to move very quickly.
It's a moot point. The stock market is going to render almost all those awarded options valueless. The company doesn't make any profit.
That is exactly right! The company is far too small to justify as a standalone. They are in a fiercely competitive market w/o any economies of scale and w/o the capital required to affect anything more than agonizingly gradual diversification efforts. A blip by a single customer (e.g. VW) can significantly impact earnings for a couple years. You have to wonder if any price concession will be made just to keep what business there is from VW, both that in hand, and that on a go-forward basis. The technology is terrific, but the margins are nonexistent or negative and the management infrastructure is extremely limited and less than stable. They are either pricing sophisticated, hi-tech, highly engineered product lines as if they were commodities, or otherwise cannot achieve the scale economies (i.e.right-sized revenue base) to leverage incremental margins. Of course as other have intimated, the company is not really being run for shareholder owners otherwise its sale would have been realized well before now. It's a zombie company running a bit below breakeven and hanging on w/every quarterly result an adventure. It works as an R&D arm embedded in a larger company. It's a high technology cost center rather than an earnings generator as presently configured.
If the BOD drags its heels much longer the 60-80% premium you seek could come off a much lower price per share, and that will make no one happy. I'm not sure the Board realizes the risk in waiting to sell the company versus the years it will take to rebuild strategy, a smoothly-integrated management team, and executing a new plan. You are talking about implementing a near total turnaround after failing to take advantage of the most robust automotive market in history. This thing could implode internally at any time. I would imagine employees have resumes at the ready. Almost all stock options are out of the money and at real risk of being worthless. There is little incentive to stick around in an environment where the company is losing money and cash is evaporating. Directors and shareholders value is at even more risk than the recent stock price declines suggest if they do not act soon. If they wait too long they could be looking at a take-under just to salvage a fraction of shareholder value.
what a debacle, all on the current Chairman/Interim CEO/President's "watch". I use the word watch loosely. Not sure anyone there has been watching anything, least of all the cash balance.
Before there is nothing left. China is looking at a generational slide in manufacturing likely to last another 10-15 year. S. America is in a near-Depression. U.S. manufacturing PMI is slumping badly. Expect more resignations as we are only in the early stages of a global manufacturing recession. There is no open market exit for either insiders or large institutional holders that would offer anything much above a total equity wipe-out. Any sale of the entire company at or slightly above net working capital per share in the $2.50 range should be welcomed.
Everyone can see it coming. It may already be discounted. Everyone has to logically assume the worst w/the CEO being severed just before the release in about a week. The company almost never hits bottom line quarterly numbers anyway, and this could be particularly ugly w/the surprise departure of the CEO. Assuming a horrific number, "knowing" it may be coming, and then actually seeing it printed in a release may be two different things. But it should be largely expected. Honestly at a $6 share price, we may be beyond earnings numbers and quarterly reports at this juncture. We may be at the point of asking the fundamental questions of just how much are the company's technologies and assets worth? How do you structure a company w/great technology exposed to a global manufacturing recession to remain viable and grow? Do we even have a viable business plan in the first place? Should this really be a stand alone company? Why haven't we prospered in the best cycle for the automotive business for decades, if not all time? Do we need to re-think everything from the ground up? First step has to be to stop the cash flow bleed, immediately.
The two biggest risks, really for most technology and small cap stocks as well, are going to be margin liquidation and redemption calls on hedge funds. Feels like late 2008 playing out again and picking up steam. Some hedge funds re going to see AUM cut in half from a year ago.
Or will all the government money be spent to rescue the major banks again w/little left for highway infrastructure ? It feels like late 2008 all over again but w/ the Debt/Housing crisis reverberating from China this time instead of the U.S., and banks moreover needing a bailout from bad loans to all the major energy companies. Of course the funds are approved/earmarked for highway spending, but in desperate times all bets could be off to avoid a worldwide financial collapse (e.g. Sequestration). We should have let a Depression happen in 2008/2009 to cleanse the system of all the bad actors. Instead we now get a series of Great Recessions to accomplish the same end but taking a generation instead of a few years. Russia, China, Canada, Australia, Brazil and most MidEast countries are at particular risk of currency collapse, i.e. currencies that will ultimately trade at mere pennies to the U.S. dollar. It could be worse than 2008/2009 as this time you have a commodity collapse paired w/a bona fide Financial Crisis in China. Global recession would be the benign outcome, global deflation the not-so-benign outcome.
And now the Chairman is running the show and getting 100,000 stock options and 25,000 shares of restricted stock for doing so, well for part of the year at least. The same guy that has failed to enhance shareholder value during the entire seven-year auto upcycle, and failed to put in place a solid, cohesive and stable management team. He's the Chairman, the leader of the company in terms of oversight and game plan. It has been seven years of epic failure. A betting man would bet that his just announced options will expire worthless, and possibly his restricted stock as well.