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Thursday, October 23, 2008 11:15:49 PM
I have see this too many times. Take for example Lyrtech (LTK- Canadian Venture Exchange). They seemed like a good deal at .07 last year. I did not look at it closely enough. They got served a demand note from their bank in January. Stock plummeted to .005. They are actually profitable, barely, they just have financial problems. How does management solve the problem? Do a 1:15 R/S. It came out at .15 after the split (was at .01). Now it is at .05. R/S are the oldest trick in the book for fixing difficult problems. Do a R/S and make an offering = printing money and screwing investors. BS.
My point? Trends are hard to reverse, especially when it is financial.... uWink has done nothing to pull it out except for getting 4 terminals in a restaurant in Miami on a trial basis. Therefore I see their trend continuing.
A company that has pulled out of this? Someone on this board recommended VBDG to me. Vertical Branding. Nice pick, but they achieved what they did through cost-cutting. Does not excite me. Low revenue growth. And when they make some money,they will just have to hire back... it is difficult to pull out of this. It costs money too (severance packages). Sends the wrong signal, pulling the stock down.
This is especially true of software companies. The root problem is the inability to estimate. Ever ask a programmer how long it will take to write (fully write, develop, test, debug, document, etc) a piece of code? Ever gotten an accurate answer? Because of that root cause, software companies are badly managed. That is right I am making that flat statement. If management = the ability to forecast costs, revenues, and plan things so that the enterprise makes money, software managers are horrible. They are egotistical, greedy, detail-oriented, technically-oriented and self-serving. I am making a general statement about software companies, not about uWink. I do not know enough. But they are a software company, so without knowing any better I apply the same logic to them. For that reason I tend to stay away from software companies as an investment.
Raw made a post some time back that the leadership he saw at the HH opening were tight-lipped at first then started talking about these amazing opportunities facing uWink after they had a few drinks. My reaction? They were tight-lipped because things were not working out. Once the booze started flowing they started BS'ing like they always do. To protect their job in a 1-2year time frame. That is about how long BS lasts.
I work in an industrial company now. I do Project Management/ Cost Control. I manage $10M projects, making sure we meet Cost and Schedule. We know within 5% how much time and money it is going to take to do something and have well-defined ROI criteria for a project. We know how much money we will make next year. Software companies, with all the egos and BS forecasts, have no idea. Generally, not uWink specifically. But I have to apply that preconceived notion, unless I met them personally and decided differently.
That is all I got...
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