Looks like a race to exit before the March quarter report after the close May 9 and the May 10 CC. The forward outlook could be pretty clear at that time. Not sure it will be a good outlook. The private market value of the company may be higher than the public value, but I am not sure if there will be a private buyer. No other public companies seem to be interested. Private equity would have to be sure it could re-build the company behind the scenes for a number of years and then bring it public again at a required rate of return. It's possible, but it could be a significant makeover from executive leadership, director oversight, strategy, marketing, pricing, funding, getting a new head of technology, etc. The technology is there, but not much else.
Yep. It could be in the death throes now, unless they sell the company. That possibility is growing dimmer by the day as no potential acquirer has stepped up to bid on the company, not even at $4.51 per share on the stock price. PRCP has no one that knows how to actually run a company. The BOD cannot implement any strategy because the business model itself is flawed. They have no one left that knows how to grow a company. They are trying to simply save it w/cost cuts. They are hamstrung by continuing negative cash flow from operations. They probably have no pricing power because competitors smell blood and are ready to deliver the final blow. Employees have no idea how much longer they will have a job. Insiders stock options are worthless and stock held by them nearly so. Institutional holders are complacent and ready to chalk this one up as an epic fail w/o much fanfare because they have well diversified portfolios, and whatever happens w/PRCP is merely a rounding error to them. Like you say another great day for the broad market--moving toward record highs. Thanks heaven's for diversification. If you were loaded on PRCP you could be wiped out. Buckle up for the March quarterly results. It could be a doozy.
Even in a blow-out revenue quarter in June 2015, when they recorded $23.4 million of sales, pretax income was a paltry $0.5 million. Such is the impact of the lower margin CMM acquisition. There is nothing here to like as a stand alone company. They need to sell the technology and patents and return money to shareholders. Given the margins, I doubt anyone would want the order book or backlog unless they could affect some synergies or economies of scale w/their own existing business.
In the final analysis, Moab's stock purchases are only blunting the rate of decline. The stock is still going down. It continues to hit new lows. The company should have been sold a long time ago. A few of us have been arguing for that for a couple years when it was still double digits. The longer they wait, the less shareholders are going to get. If it ends up as a stand alone, what is great technology worth if it does not generate net income or positive cash flow? It's probably worth a fair amount in someone else's hands. PRCP has shown it is worth very little in their hands. The company cannot make a consistent profit even in the best of times for the auto industry.
They appear to be the buyer of last resort, although I believe a chunk of the recent purchases was stock put to them at a price of $7.50 that they had to eat. In the past, PRCP itself was active at repurchasing stock near $5, viewing that price as significantly undervaluing the company's technology and business. Of course they have squandered a majority of their cash on hand and need to hold close the remainder to fund severance payments and negative cash flow from operations. They won't be buying back stock any time soon. Moab will have to decide if it wants to be like the Saudi swing producer in the oil market, propping up the price while all the other large institutional holders benefit w/o doing anything themselves. If so they may have to stay active through probably a couple more difficult quarters at a minimum. However, most institutions are hesitant to acquire in excess of a 10% position in a company's outstanding shares (diversification issues and short swing trading rules rear their heads). If Moab really wants both Mr. Marz and the BOD out, they may have to consider if it makes more sense to let the stock run its course through a couple tough quarters prior to the Annual Shareholders Meeting rather than prop it up. That's a tough call to endure the likely pain of a share price decline from already really depressed levels to gain majority support to get rid of these guys. They should have called a Special Meeting and issued a proxy contest already, BWDIK. Every day nothing is done to remove the management and BOD is another hickey to the co.
Not too much of a surprise because for mid-water offshore work the tipping point is probably $75-$80/bbl., minimum. I can count the number of buy and hold investors I know on one hand: Warren Buffett, ah give me a minute to think of the other four. Sorry, couldn't come up with them.
Whoomp! there it is. Pusillanimous PMs getting exactly what they deserve. Hey, it's not their money. Going to feel like an eternity between now and the earnings release date, an eternity.
You would think there must be support at some price. You would be wrong. The current management and BOD structure all but assures that. You can feel the nervousness over that May 10 "earnings" report. It's palpable. In the meanwhile all the large institutional holders are doing their best Nero impersonations.
The industry PR you are most likely to see is the metastasizing emissions scandal for the auto manufacturers. It could be one of the top 5 business stories of 2016. As for PRCP, they could simply be collateral damage as their customers face the mounting distraction. Scheduling new 3D sensor and software installation probably isn't going to be at the top-of-mind list of things w/which to deal.
If they are still paying for a PR firm, that is indicative of how this company is being run. Didn't The Police have a song: "Money for Nothing"? Other money for nothing debacles: executive search fees, severance payments, directors fees and stock options, the CMM acquisition, proxy defense, visits to institutional investors, etc. That's just the short list.
don't underestimate the potential collateral damage from a much-worse-than--expected outcome for VW, or a creep of the emission cheating scandal to other car makers as well. PRCP couldn't maintain consistent profitability w/a historic record output for the auto industry, how the hell are they going to manage under all these adverse circumstances that will prompt sharp cutbacks in spending and w/the peak of auto production likely upon the industry?
If they don't sell it, the whole company will be gone within about two years IMO.
If Moab were not buying, although technically I think a big chunk of the shares they added were put to them at above market prices, I shudder to think where the stock would be trading. With this management team and BOD in place, the shares are still overvalued. We should see new 52-lows soon as the exit before May 10 continues. Customers could begin diversifying their supplier risk away from PRCP, at least partially. Then you have to wonder if PRCP will lower prices to try and retain market share. Although w/a significant quarterly trend of negative cash flow let alone net losses, it is hard to imagine they can lower prices much w/o a total company meltdown. Look for another round of cost cuts.
They need to sell the entire company, or the technology, quicker than management and the BOD can destroy it. The race is on.
BTW, while Moab did buy some stock I believe much of what they added was put to them at above market prices. Without Moab's open market purchases, I would shudder at what the price of PRCP might truly be. Nobody is touching this ahead of earnings on May 10. This is a disaster.
It may be the worst run company in all corporate America. And yes, it is run by pocket liners, not value enhancers. Their legacy is one of failure and lack of oversight. As a shareholder you can take a hit and if you are diversified the pain is minimized, plus you get a tax loss. I do feel bad for the employees. They probably don't even see what is coming.