This leads me to believe we will continue to see sizable EBITDA losses and negative cash flows going forward. They want to perhaps sell some of the assets to grow the Kazzaa business ? Well if they are going to go that route, why dont they sell off the entire business. They could easily shop it to Pandora, Spotify etc etc. Even if they sell off part of their assets, they will continue to draw the average higher up manager fees of 25k per month, of course that will accelerate the cash bleed, whereas if the whole biz is put up for sale now...that cash bleed would not continue
Of course the answer to this is obvious..They would all be out of work..go figure
1, I did hear the words from Musci re "significant announcements from ad agency coming" in the next few months
2. They are down to 40 employees now-good sign
3. They said there will be modest revenue growth q1 over q4 in the ad agency biz..Modest really means non significant
4. They said their product development costs with respect to KAZZA will moderate a wee bit from the 1.5 million in Q4. This will not help b/c these costs savings will be offset by the growth in 3rd party media costs with respect to growing the Kazzaa biz
5. Most importantly, In the q and a seesion, Musci di9sclosed to Gilliam that the revenue levels q1 over q4 will be the same..ie 7.8 million, I can assume..This is not good at all.
6. Re the restructuring efforts, the most potential to save is 50% of 6.5 million.these are the numbers floated in the last cc in response to Gilliams query, but even if that was the case...best case scenario we will still bleed 2-3 million..ie..a 7.8 m Q1 revenue base and a cost expense base of 10-11 million (that assumes the maximum of restructuring savings and a very modest uptick in 3rd party media acquisition costs, and modesrate savings on the product development front)
This co. is exacyly where VTRO was about 15 months ago..can they turn the corner? VTRO did, and maybe these people can, but Pete Corrao the CEO of VTRO was a real passionate guy and very enthusiatic about VTRO prospects, I do not see this from this management team. That said, I still am holding out for a turnaround but not as much as I was with VTRO.
I think that if they shopped the WHOLE COMPANY for sale right now, us shareowners would fare alot better than if we waited for a turnaround and saw this team continue to milk the co. cash levels on a business that is negative cash flowing to the tune of at the very least 2-3 million a quarter...also how many of these guys are costing us 25k per month..3? 4? 5? The 10k did not have their salaries..instead they will file an ammendment to the 10k to disclose their salaries at a later date. I will post each of the top managers salaries when they become publicly available. but suffice it to say..all these guys collectively are costing us alot of money. Again at the risk of sounding like a broken record they should SELL THE WHOLE COMPANY NOW. and give us all a liquidating dividend ..
This from p. 35 of the 10K::
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item will be included in an amendment to this report on form 10-K or a proxy statement which shall be filed with the Securities and Exchange Commission no later than April 30, 2011.
Again, I think the passengers on this ship-US-have the potential to be saved..I am still holding out hope that these guys can engineer a turnaround..But they should really think about the creation of shareholder value and put us first...Taking less salary would be one way to do that...having a partial ipo of the kazzaa biz would be a second way. selling off the entire company would be a third way ...joining forces with Pandora or a similar competitor would drastically cause massive cuts in duplicative employees..and rental space...we wouldnt need 2 management teams if a partnership was created right? All in all I wish they would throw us a bone now and again..Update us on what is going on Corrao of VTRO would go out of his way to update the shareowners regularly during the quarter..
You sound like a liberal democrat..We need to go into debt or dilution in order to stop hemmoraging more losses. Hope and Change always takes a backseat to reality. Nothing these people said today makes me confident that the cash burn will discontinue at the current rate of at least 2-3 million/quarter. Musci made it crystal clear that the revenue number q1 over q4 would be flat..Go listen to that call again. The cost restructuring is not going to improve very soon either as they implied many many times in the call..any opex savings would be at best 50% of 6.5 million (this was made clear in the Q3 2010 call) and we know that the product development costs will abate only modestly, but that would be offset with 3rd party media acquistion costs to grow the kazaa biz-metrics that they did not disclose...One only must wonder why they refuse to release metrics (currenly) of the kazaaa subs or the attrition of the legacy subs. The SEC doesnt preclude them from doing this; neither does the SEC preclude them from releasing current April 7, 2011 cash balamces..Why the mystery? one only wonders
Possible q1 numbers
Lets start from the baseline EBITDA organic cash flow cost base and revenue base and adjust for managers projections going forward
Revenue adjustments from Q4
1. The ATRN ad agency will stop bleeding $, and may adjust upward modestly..lets add .1 million
2. Management said revenue, total will be about the same as Q4
Cost adjustments from Q3
1. Product development costs should "moderately decline" from the 1.5 million in Q4, per managements assertions. I take that to mean roughly by 25%, or a decline of about .4 million
2. The rolling effect of the restructuring effort should materialize. Per Q3 conference call, in response to Gilliam's query re what number management has in mind re their projected "30-50%" cost cuts, management replied about 6.5 million. So lets assume the middle ground of 40% of 6.5 million and get about 2.6 million
3. Finally, I am assumeing that any gains in ATRN subs due to the mobile rollout may be offset at least in part by the media 3rd party spend, so lets be conservative and add to the revenue base only .2 million
so now lets add it all up
total rvenue adjustments to Q4 revenue base of 7.8 million, or .3 million more equals a total of 8.1 million
Total cost base adjustments to the 13.4 cash organic burn in Q4, or 3 million, equalos a total of 10.4 million
so THE BEST CASE SCENARIO for Q1 2011 is a net adjusted EBITDA loss of 2.3 million. Now going forward, if management can gain ground in the ad agency biz as they said they would and if media 3rd party costs can increase the Kazaa sub revenue faster than the expense burn that 2.3 million gap can be closed and hopefully can be converted to an EBITDA cash flow gain...All in all, looking at the math here, this looks like dead money for the next 4 quarters unless management can get something done to unlock the hidden value of the balance sheet, as opposed to the p and l sheet.. like do a partial IPO of kazza assets, sell off all or part of the biz etc etc
well I think when management said big announcements will happen to the ad agency, thats a big hint they are giving us that they plan to sell it off. VTRO sold their ad division and garnered 11.7 million, but after underwriting fees, attys fees, and severance fees, I think they got ro0ughly 7-8 million max..If a similar strategy is taken with this management team, I doubt the pps will move much higher..sure the balance sheet will be much better, and the cash will be roughly only 1.56, after factoring in the share dilution after Brilliant digital is paid when the Kazaa tranaction is cloSed end of 2ND QUARTER..SO ASSUMEING $1.56 IN CASH, the pps wont go over 4 dollars..also another thing to think about...Brilliant Digital will own roughly $35% of the whole company after the kazaa deal closes, and BD will also have 2 people on the BD team appointed to the board of directors of ATRN
Also, one must put theirselves in the position of the ATRN management team and ask what would you do to grow the co., but at the same time look out for their interests as well...When the cash runs out, they all will be out of work, so to raise cash the easiest and quickest way, you sell off pieces of the business. Their best asset is not ringtone or shopit, but that ad agency, which is a top 10 in the world...alot of companies would want that, and they could announce a bridge loan that would be a lien on the eventual sale of that part of the business. VTRO first secured a bridge loan for 10 million and later announced that they were selling the third party ad agency
That may be true..but based on the run rate on the costs side, and the projections of run rate revenue...we will be bleeding cash until the end of the year and even if we turn cash flow positive maybe maybe just a million or two max per quarter..that kind of cash flow will not cause the pps to run...I am long and strong and I want to succeed but its going to take a while to even just double i would say at least at very least 12 months...I wish u could prove me wrong
I am new to this stock..getting ready to pull thr trigger and buy. Its intrigueing that the stock is selling much less than the companys cash minus its total debt. Am I missing something or is this just a gift? I know that some here have been saying that the majority shareholders with their voting power can approve the buyout for less than the cash. Nice try but no cigar. The majority shareholders owe a fiduciary duty to the minority shareowners and any attempt to take that step would be halted by a lawsuit...Does anyone know why this co. is being given away..are their lawsuits? ????
The attorneys who wrote this language did so out of necessity to avoid a malpractice suit in case of a derivative shareholder suit under bvi law. Dont let that language scare you. Common sense is what governs most laws be it in the VI or in the states, and its just common sense that voting power by a majority to steal shares backed up by cash for less than the cash is worth violates common sense. I am a personal injury lawyer but remember most of this from law school. The model biz corp act is adopted in all states and is derived from the English common law which is also adopted in the VI..By way of comparison, on every medicinal bottle bought at the pharmacy..there is a disclaimer on the back, that reads if symptoms persist for longer than 7 days call the dr....its just called a cover your a-ss disclaimer..so dont let the language scare u
that is good, but at what cost? If you sell 100 dollars of lemonade, but have to spend 130 dollars to sell it..is that progress? They conspicuously omitted any mention of the exact number it was taking to acquire these new subs..didnt they? Looking back on the last several years of ATRN's cash flows, they always spend more than they take in. Reminds me of Uncle Sam....The only winners in this game so far have been the management team who are collecting 25,000 dollars a month, and in some cases, for top line ATRN ecexs at least in 2009, more than 100,000 dollars a month..thats right some were making more than 100k per month, of course that was solely invested money from shareholders as the company was losing money BIGTIME in the last 2 years....in child speak, they were drawing salaries from money we invested in ATRN shares
Even if they acquire 100,000 new subs by end of 2011, for a total of 185,000 subs give or take, the ARPU will be 10 dollars (and thats a very optomistic number) thats 1 million per month...Of course we need to adjust that downward for the costs to obtain these new subs, and adjusted further downward for the attrition of the legacy subs which are literally dropping like flies...so with that conservatively and very optomistically we get at years end at best 700,000 per month or 2 million more per quarter..at best...that is not enough to close the 3 million plus cash flow gap that exists now and built into that number has been factored in th rosiest restructuring cost savings and the lowest forecasts on 3rd party media spend, and optomistic forecats on the ad agencies' success rate...The only winners here are the managers who keep drawing their good salaries..BOTTOM LINE..Its almost a mathematical certainty that ATRN will still be in the red at the end of 2011
wrong.. I am assuming they already have 85k right now..so the new subs would be an additional 100k..thats 1 million more a month...again....with the most optomistic projections for cost savings and the most optomistic projections for revenue increases..it will not be enough to close the 3 million gap that will exist..at end of q4 we have a 5 million gap...going forward I anticipate we still will have a shortfall of 2-3 million at the very least for the next 4 quarters..now lets play with those numbers if at the VERY BEST, we have a cash burn rate for the next 12 months of 10-12 million...that will be the end of this company...Gilliam today speculated that the ad agency is worth no more than 5 million..hinting that they will sell that division which I have been predicting for more than 2 weeks on this board..BOTTOM LINE...if they do that that would not even cover even half of the cash burn for the next 12 months..and again I cant overemphasize that 10-12 million cash burn is built on the most OPTOMISTIC projections
I hope to God you are right...and u may damn well be right...but again, What will it cost to acquire these people and also how much more money will we see burned on product and development costs, and how much faster will these legacy subs decrease...the legacy subs are bringing in approx 2 million a quarter..and they are dropping like flies, as a result of the 0 ad spend going forward...management said they are no longer advertising to get thes folks...A company can make 1 billion dollars a month but if they are spending more than that,,, the stock will eventually go to 0...I dont like this management team..who so far are the only winners whatsoever, and winning solely at our expense
also another significant development coming up in a few months is the closing of the Kazaa buisnes with Brillian Digital. At that closing, the share count will overnight increase by 25%, when ATRN must tender approx 1.7 million shares out of treasury to Brllian Digital....This will be a rather significant dilution notwithstanding the possible additional dilution of an additional equity or convertible bond offering that management says may transpire in the near future to raise cash to keep the country from filing for insolvency
I hope you are right because presently there is not 1 company in the digital download and straming industry that is making a profit..not 1 ,,Napster went under Pandora has been operating at a loss for years..and other small players..all of them operating at losses