Mike Murphy Update: Back on Top Buy List
Telkonet (TKO) did it! As of this morning, Ron Pickett, the drive-by CEO, becomes Vice-Chairman of the Board and, as I predicted, Jason Tienor has been named President and Chief Executive Officer. Tienor promptly named a new Chief Operating Officer, a new Chief Financial Officer (CFO), and a new Vice President of Global Sales. Sounds like a pretty clean sweep.
Tienor said that the company's cost reduction program has projected savings of about $2.1 million a year. Telkonet's energy management and hospitality businesses are scheduled to double, matched by continued growth within the government systems-related sectors. Gross profit margins will increase through 2008 in line with increasing revenues, and the company is still committed to cash flow breakeven in the near term and positive earnings per share for the full 2008 year.
The proxy is also out for the Board of Directors vote coming on December 21, and Ron asked: "What do you suggest when it comes time to vote?"
I suggest voting against Warren (Pete) Musser, the Chairman of the Board, and against Ron Pickett, the former President and CEO. Vote for the other directors. Truthfully, they all deserve a "no" vote for letting Pickett try to run the company by remote control for so long, but we will collectively have a bigger impact if Musser and Pickett get fewer votes than the others.
I like Pete Musser from his days at Safeguard, but I think he would be a bit shocked if he got a lot less votes than the other outside directors. He is 80 years old and probably doesn't want any stains on his record at this point, so maybe shock would turn to action. Jason Tienor needs to be the management person on the Board, and Pickett needs to get out of the company.
Meanwhile, with the appointment of Tienor as CEO, I am making TKO a Top Buy again up to $5 for my $15 target.
