KK grossly over paid to acquire companies with modest revenue growth and declining margins.
Now he wants to increase expenses by spinning these acquisitions off into their own separate entity.
Of course the customers are "satisfied". They are naming their price for AA products because AA is desperate to sign contracts, even at low margins.
do_not_search you should do some searches so you might get a clue about what's happening here. Wall Street knows what's happening. When will you wake up? When AA stock price is $6, $5 ?
If one "pays attention to the company" they will find one with declining revenues , shrinking margins, and the prospect of significantly higher operating expenses.
"Book value" is whatever Alcoa's management wants it to be. Do you really think Alcoa's factories have a price (when liquidated or sold) anywhere near as high as AA currently carries on its company books ?
Actually, considering AA's high debt level, the company currently may have liabilities great than assets.
Considering Alcoa's weak balance sheet, massive debt obligations etc.... combined with the poorly performing business operational results, I do not expect another company will "buyout" AA. At least not at a price anywhere near AA's current $7.50 per share price.
More likely an acquirer would be willing to pay about $3 per share. Or, AA could possibly need to file for bankruptcy protection from creditors. If this happened other company's could purchase AA assets through a court approved liquidation proceeding.
Last year's announcement of KK's plan to divide AA into two separate entities continues to scare off investors.
Why should AA incur a lot of costs (to divide the company), when there is no business operations benefit to doing so. In fact, by splitting the company AA actually loses some valuable synergies and economies of scal.
It is time to fire KK, cancel the plans for a split of the company, and hire someone sensible to get this company back on a good positive track.
Land assets are worth far less than what they once were , so oil and gas companies (such as CHK) take an accounting write down of the land assets. Sadly for CHK, the lower land values means that the company's debt obligations now exceed the value of its assets. In effect , CHK is bankrupt. For now the company can keep its doors open but if oil and NG prices do not soon have a significant increase, then CHK will have to file for BK protection from creditors.
I don't believe anyone knows the answer to your question.
My best guess is that if oil prices stay in the $30 to $40 per barrel range then oil service company stocks will suffer quarterly financial losses and their stock prices will continue declining.
I think PKD's balance sheet is strong enough that the company can keep its doors open for all of 2016, but beyond one more year, probably not. Eventual bankruptcy is in the conversation (for PKD and most all oil service company's) , and their stock prices reflect same.
If oil prices ever do stabilize, then move higher, the oil service company's still in business will get significant stock price appreciation.
CHK's debt is much more than value of the company's land assets. What's happening now is that CHK is using its cash reserves to keep the company operating. Once that cash is exhausted then CHK will likely file for bankruptcy protection from creditors.
There is no way for CHK management to avoid the company financial losses, which are due to oil and NG prices.
On this message board many of the longs bought in because Carl Icahn owns some CHK shares.
What they never realized is that Icahn has historically had plenty of failed stock investments. . Also, Ichan likely put on hedge positions (to protect his energy investments against declining oil and NG prices).
Considering that CHK's land assets are currently worth less than the company's debt obligations, CHK right now, on paper at least , is "bankrupt".
As for filing for bankruptcy protection from creditors, CHK has enough can and cash flow to hold off doing that for at least another 6 months, perhaps longer.
Yes, CHK has options to avoid BK filing for many months, even years. However, for the foreseeable future CHK's business operations will continue to lose hundreds of millions of dollars. In this environment the CHK stock will continue its price decline.
CHK"s has been trying to "sell assets" for more than 6 months now. There are no buyers.
CHK"s land assets are worth less than the company's debt obligations. This is why filing for bankruptcy protection from creditors is a likely scenario.
I don't doubt CHK can avoid BK for another 12 months. But, over the next 12 months , unless oil prices double soon, CHK's business operations will lose a lot of money and I expect the CHK stock price will trade down to about $1, $1.50 per share.
When oil was $80 a barrel CHK was not making money. It is ridiculous to
believe $50 oil is now CHK's "break even".
The company's business operations are losing tens of millions of dollars every day.
CHK was originally built to make a profit when oil is $90 a barrel and NG is $4 . Today's oil and Ng prices are well below CHK's break even numbers, so unless oil quadruples in price, and NG doubles in price, CHk's business operations will continue losing money.
CHk has a massive debt obligation load and it is possible the company will eventually have to file for bankruptcy protection from creditors.
CHK stock sell off is due to the reality (debt offering) of bondholders suffering from receing only .50 cents on the dollar for their previous investment.
CHK is in no danger of filing for bankruptcy tomorrow, but the company is headed in that direction, and the CHK stock price reflects same.
I expect the CHK price will settle in the $1 to $1.50 per share range, and at that point it just become a matter of whether the company keeps its door open or files for BK. Here at $ above $4 per share there is a lot of risk to holding the stock.
I did not write "bottlenecks". My point is that if oil were to remain where it is at $40 a lot of industry suppliers will have to file bankruptcy. Dozens and dozens of companies within Texas and Oklahoma alone. For now they are hanging on but can't do that indefinitely. If oil were to trade down to $35, $30 it expedites the process of these companies closing their doors.
Once enough companies have shut down (permanently) there becomes less supply and prices may increase. For now, though, companies (such as CHK, lots of smaller drillers and service operators etc...)are hanging on and still producing.
I think prices can only go up when enough suppliers have closed their doors. That's not a short term bottleneck, it is a significant industry supply change.
Consider this. The oil industry companies, OPEC etc... feel some pain here at $40 oil but they continue producing.
Maybe $30 oil will amplify the pain enough so that (around the world) serious production cuts happen. Once the serious production cuts materialize, this will stabilize the price of oil and i will begin to rise.
However, once the price climbs back to around $40 production resumes. and so does the downward pressure to the price of oil.
It's just hard to imagine any supply-demand dynamic emerging which will get oil back up to $60 or higher.Maybe after a couple more years of current pricing enough suppliers will have closed up shop , unable to come back on line as a producer. this will limit supply enough to sustain oil prices above $60.
"Book value" is an accounting measure useful for analyzing a financial services company, maybe, but not an energy company.
I think it is very possible the price of oil and NG could remain at current levels, or lower, for many years. Technology has made easier the extraction of oil and NG.
Also, technological advances are making for steadily diminishing demand for oil and NG , from both industry as well as consumers.
CHK's current stated "book value" may currently be unrealistically high.