IMO every LONG... who holds shares in ARAY
and hopes/expects to see it doing much better a few years down the road...
NEEDS to help hold management and the current BOD accountable for the disaster that THEY have created in the marketplace! However you choose to make your feelings known, please do so professionally and as frequently as there is justification for contacting them.
Obviously one time will not do the JOB... these incompetent, greedy, short-sighted MBAs who have been brought in to bean-count and micromanage do not learn as they go! They seem quite satisfied to repeat past mistakes just as long as the gravy train continues on track for them!
So every botched earnings release, every failure at clarifying SRS advantages or financial backlog, & every disappointing PR that does nothing to improve the fortunes for stockholders is a valid reason to voice your thoughts once more to IR, management, & the BOD.
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Msg: 1920 of 1921
4/30/2008 8:11:32 PM
Author: PauvrePapillon
Strong Buy
Recs: 1
What do Thomson and McNamara bring to the party, really?
CEO Thomson is no doubt patting himself on the back today for his latest explanation of the difference between CyberKnife SRS and gantry-mounted radiotherapy machines and for the fact that UBS recognized that management was slightly more transparent in terms of backlog disclosures at this past conference call. But these are marginal improvements at best.
Thomson never learned the one about a picture being worth a thousand words so we still don’t have that animated video that would really get the job done in terms of product differentiation. And the order backlog is still a source of confusion as is revenue recognition and virtually all of the other financial metrics. Accuray sold six shared ownership units and still didn’t even match last quarter’s $0.04 EPS. Why is that? The analysts have given up on this company. If not, they would have pressed management for an answer to that as well as many other very important questions.
Thomson and McNamara did not invent, design or develop the CyberKnife. Nor are they particularly adept at selling either the technology or the company. The medical community is not buying this technology based on anything that Thomson and McNamara add to the equation and Wall Street isn’t buying the story, period.
In the real world, performance is judged and compensated on results, not intentions. Based on results, Thomson and McNamara are not competitive in terms of being able to sell our story to Wall Street. It’s just that simple. There are better guys out there. Tomo is trading today at a 13 percent premium to Accuray based on little more than half the trailing quarter sales and a loss of $0.12 per share versus a profit of $0.01 after Accuray management glommed off its $0.07 per share.
Accuray Revenue $58.8 million, EPS $0.01, Market Cap $431 million
Tomo Revenue $38.9 million, EPS ($0.12), Market Cap $488 million
It’s just like UBS said last quarter:
“We expect progress with investors to lag demonstrated results.”
Here is a very simple strategy for any large Coniston Partners-like activist investor. Take a position in Accuray around the five percent range. Organize with other large shareholder to pose enough of a threat in terms of offering an alternative slate of directors to force the current board of directors to reduce management’s compensation package.
If Thomson and McNamara don’t want to work for Accuray without stock-based compensation that vests at prices less than the IPO, no problem. We don’t need them. We’re not going to lose one single sale if we replaced both of them tomorrow with an interim CEO and CFO that no one has ever heard of.
On top of that, we would immediately gain 20 to 30 percent in market cap just to be rid of this management team. It’s called addition by subtraction. Whether it’s fair or not, Wall Street has no confidence in this management team. Get rid of them and Wall Street’s assumptions about the company go from negative to neutral. That can only help us.
Now here’s the kicker. It’s a no-brainer really. Just add back in half of the EPS that management is raking off the top and we are instantly in line with analysts’ previous expectations.
For this level of executive compensation, we should be getting performance at least on a par with Tomo, which is losing money and still trading at a 13 percent premium to Accuray. But we’re not. All we’re doing is killing our share price and we’re getting nothing for it.
Again, Thomson and McNamara may have great resumes. They may clean up well. They may look good in a business suit. They may speak with intelligent sounding accents. But what do they really add to this company? Basically, they are cashing in on the ground-breaking work that was done by Accuray’s development team over the past 10 years. That’s great for them. It does nothing to help and in fact does much to hurt the shareholders.
Shareholders would do better with most of that $0.07 per share per quarter going to the bottom line rather than lining the pockets of a management team that really doesn’t bring anything to the party.
This is not rocket science. There are investors out there that not only understand but specialize in these situations. They only need to have this deal brought to their attention long enough to run their due diligence and we are going to see activist investor play leading to regime change at Accuray.
Keep letting your board of directors know that you are unhappy and know that not only are the large institutional shareholders doing the same but also that it’s now only a matter of time before some activist shareholder somewhere takes a look at Accuray and thinks to himself, here’s an easy way to double my money over the short term while laying the foundation for a multi-bagger long term.
It's just too obvious and safe a play not to find a taker.
And, yes, I'm working on it.
