whether or not you never collect doesn't determine whether or not it's revenue. while revenue recognition rules are changing slightly as we speak, during 2014 it worked like this. revenue is generated when a product is shipped and you can reasonably assume that you will collect. i see no evidence that they ever shipped anything that they didn't expect to collect. at the time of sale you record an allowance for doubtful accounts (reduces accounts receivable on the balance sheet) and bad debt expense for the amount that you anticipate you will not collect. all businesses have doubtful accounts, and the allowance is usually booked based on prior experience.
as far as accounts receivable, they collected $220k in q4. after q3, that's not too shabby. i'm willing to give them the benefit of doubt that the q3 sales occurred right at the very end of the quarter, which can make your ar look a bit hairy. honestly, i don't exactly when the sales and subsequent collections occurred. as such, i also cannot calculate dso. it's possible that the q3 sales happened on sept 30th and were collected on oct 1st. it's also possible that the q3 sales happened on july 1st and were collected on december 31st. the financials would look the exact same in either case, or any possible scenario between those two extremes. overall, their ar went up $200k year over year on a $280k increase in sales and an increase in sales of $120k from q4 2013 to q4 2014. overall, i don't see anything concerning in ar like i did at the end of q3...and i'm the one that originally pointed out ar at the end of q3.
what IS concerning is the lack of substantial sales growth and deteriorating operating margins on the sales growth that has occurred. the company is out of cash, yet again, there's no market cap available to fund any meaningful equity financing, and debt financing has to be pretty much out of question considering the company is simply failing to go anywhere.
at this point, i don't believe there is enough equity value to finance it with. it's either dilute following a run up on positive fda news, or call it quits and close the doors. i'm nor sure what else they would be able to do.
also...i'm very curious to know which business you spoke with. based on what you've said, i would assume triangle.
i agree with all of what you're saying.
#2 and #3 pertain to sem and seo, respectively. this is a point that i made (and had some very in depth with discussions with a guy named jake winebaum...i'll explain his significance if you care) while i was at rhd. it held true then, and it still unfortunately holds true today. if you do searches for items like "digital advertising", etc, that should return search results including dex media, you'll never see dex media. they can't even sem/seo their own company properly. secondly, if you search for "plumber in raleigh, nc", or "lawyer raleigh nc", you will not find any results that were generated by dex until at least page 5...and these are 2 of the bread and butter businesses that this company has historically served. in other words, the company can't even successfully sem/seo themselves, much less their customers. one of the major reasons that i was so outspoken against peter mcdonald taking over the helm following the merger is because, at least back in 2008, he was totally clueless about the significance of this rather simple concept. in case you (or anybody else) aren't aware, sem/seo is the bread and butter of dxm's digital business (along with internet yellow pages (iyp) and who the heck uses iyp?)...and their digital business is what their future hinges on.
of course, as the company has consistently proven time and time again, they will fail to innovate in the mobile advertising arena and will continue to be an industry laggard.
let's say that actually happened...do you think it would benefit you as a shareholder in any way? if i was a shareholder and believed that was the likely outcome, i'd sell at the first opportunity that i had.
yep...the $0.50 cent adjustment that i made due to changes in fundamentals before the market opened on the day earnings were released rather than in response to stock price changes as you have consistently claimed in the past.
if writing a post directed at somebody else is a sign of a bad day, good lord...you must have a lot of bad days. i can't begin to count the number of posts you have written that were directed at me. now, i write one, and you complain that i'm baiting you to respond. good one. the funny thing is that you have never really been anything more than a troll here that was primarily focused on me (your comments prove that). you just got beat at your own game, and you appear to be miffed about it. :-)
ahh, the old "bitter" schtick. i assume you're once again referring to your unfounded claim (another act of desperation by you) that i was fired from this company and am therefore bitter. nevermind the actual fact that i couldn't run away from rh donnelley fast enough as they headed for bankruptcy, and nevermind the fact that i remained long term positive on this company for years after that...up until the point they announced the pending spmd acquisition. also, nevermind the fact that my now negative view of this company is based on facts that i have presented and discussed here ad nauseam ever since i first took a negative view in late 2012 and how time has consistently proven me correct ever since.
you'll never give up on your tired and worn out tactics...that much is obvious. desperation makes it even more difficult to swallow a tough pill.
the fact that you consistently make things up to try to discredit somebody in light of readily available facts that disprove your lies says a lot about your desperation. :-)
you always said i moved my valuation up as the stock price advanced. i have asked you for proof of that occurring, and you have never followed through. however, i do know that i originally set my valuation at $6.50 - $8 in november of 2013. i can find the post where i did that if you want me to.
i also know that my valuation is based on fundamentals and it is not based on technicals in any shape form or fashion. i can prove to you based on my comments that i never changed my valuation from november 2013 until after q4 2013 earnings were released on the morning of march 13, 2014. earnings were released before the bell that morning (at 8:00 and 28 seconds AM to be exact). i read the earnings report and posted a comment on this board at 8:54AM, before the market opened where i said i would raise the upper end of my valuation by $0.50, and I set the new valuation range at $6.50 to $8.50. i have not changed the valuation since then. please note, also, that the stock closed on march 12, the day before i raised my valuation, at $6.48.
here is the comment that i made before the opening bell on the morning of march 13. feel free to go back through my comment history and quote any comments where i ever changed my valuation other than this.
seanoise • Mar 13, 2014 8:54 AM Remove 4users liked this postsusers disliked this posts0Reply
overall, not bad, not great
digital came in at the higher end of where i thought it would be. total ad sales down 14% q42013 vs q42012, and down 15% for the year. adjusted pro forma ebitda down 20% year over year, adjusted pro forma fcf down 32% year over year.
i'll put my valuation in the $6.5 - $8.5 range until next quarter. Less
even though time consistently proves me to be correct, you still want to postulate that i am somehow wrong without any explanation.
$0.87...that's the premerger dexo equivalent to the current price.
"This is likely why we have also seen unimpressive growth on the digital side. Customer retention must be weak which is putting a strain on DXM's ability to increase digital at the levels necessary for survival."
this is a very important point that i didn't emphasize, but should have. you stated it very well. we do know that their customer retention is weak based on prior comments in conference calls. their retention rate is around 75% from what i recall. when you combine the fact that they're losing 25% of their customers with the fact that print is consistently declining between 20 and 25% and near flat line digital growth, then it becomes obvious that they're losing a lot of customers without bringing any new ones in.
also, i wanted to add this..
i don't believe the restructuring is the path to sustained profitability and cash flow that some people are hoping for. instead, i think it's an act of desperation by management as they see their sales deteriorating more rapidly in the next few years. i continue to believe that at least certain directories will likely dwindle so small in the next year that they will no longer be sustainable and be cut, which will cause an increase in print declines. this will continue to occur over the next few years until the entire print business is no longer sustainable and eliminated entirely. at this point, much of their digital sales comes through their print sales, so that sales channel will dwindle which will cause digital to deteriorate.
at this point, the company has assessed that there are 4 years of remaining life left in their directory service agreements, which is a very strong indicator that they anticipate being out of the print directory business entirely within 5 years.
i need to see q1 before i change it. however, i don't anticipate any significant improvement in digital, and i'll probably drop it.
i'm not too concerned about the recent amendment. while i agree that it's a telling sign that the company had to pay 1.5% in order to get the lenders to play ball, i have already factored in the fact that the company is going to have to face the lenders in the next 2 years. performance of the company between now and then will determine how wiling lenders are to negotiate, and it will also determine changes in the valuation of the company...so, valuation is directionally consistent with how likely it is for lenders to negotiate in 2 years. but, as far as the recent amendments, they weren't done because the company was in trouble...they were done to enable the company to carry out its restructuring plan.
i agree with you...this is certainly not a long term hold. as i have stated many times even since the merger was first announced...this was not a good move for dexo. i believe the company had a much better chance at wiggling out of its tight spot before it merged with spmd. again, they absolutely must prove their ability to innovate in a rapidly changing market rather than continue to be an industry laggard. unfortunately, that's extremely unlikely to happen at this point.
i'm somewhere between cyto and federalist. the technology has certainly been proven effective in clinical trials and various evaluations.
however, proven technology does not equate to a successful product. being a successful product is all about sales volume driving profits. this product has certainly has a very slow ramp in sales. it absolutely is not a successful product at this point.
i have left my valuation at $6.50 - $8.50.
the price is significantly below that range. should I lower it now like you thought i should raise it when the price went above my range?
at 12/31/14, yelp had $366m of cash and marketable securities, $630m of total assets, no debt and only $42m of total liabilities. they paid $75m in cash plus yelp equity for this acquisition...easy peasy for them to manage this sort of acquisition. however, not knowing anything at all about eat24, that purchase price of $134m does seem pretty high.
the last not approvable letter involved more than just a cleaning issue. there was also a question pertaining to clinical trials data analysis.
the last prepack wasn't of a nature that it made sense for creditors to wipe out equity.
but, the first bankruptcy back in 2009...the creditors did in fact wipe out equity. in fact...the 2 largest investors today...franklin and paulson, got their shares in that reorg.
as far as institutional investors holding the company...when institutional investors get good enough that they never loose on an investment i will see your point. until then, i don't really care who owns the company. franklin and paulson are down somewhere around 90% on their investment since the 2009 bankruptcy, and they lost even more on their debt before that. did they make a wise investment? how about the old kyle bass pump and dump from a couple of years ago...if he believed his own words about what this stock would be worth in a few years, do you think he would have sold so fast after making those comments at ira sohn in 2013?
but, you are right. this is fundamental, and the fundamentals are not looking good today, they have not looked good in nearly a decade, and they're going to continue to look worse tomorrow. but, hey..feel free to hold out hope that they are able to somehow miraculously slow down their print declines and increase their digital growth rates.