My BIG question to you is this: I did not see where the company withdrew '05 guidance. Can you please tell me where you saw that . Thanks in advance.
They did not explicitly state, 'we're withdrawing guidance.' Its what they DID NOT say in their Q4 PR. I'll call your attention to the past few press releases that the company used to issue guidance:
WebCapades acquisition (Aug 20, 2004):
"With this acquisition, the Company expects its pre-tax income to jump from less than $1 million in 2003, to over $6 million in 2004, and to over $12 million in 2005.
The Company expects the acquisition to be immediately accretive to earnings, and today estimated that its after-tax earnings per share would be between $0.20 and $0.25 per share for 2005. "
Q3 fy04 (Nov 11):
"We continue to expect our after-tax earnings from continuing operations to be in the range of $0.04 - $0.05 per share for the fourth quarter of 2004, and to be in the range of $0.20 - $0.25 per share for 2005.
MarketSmart acquisition (Nov 17):
"The merger is expected to be immediately additive to the earnings of CGI Holding Corporation, which has recently announced financial guidance of $0.04 - $0.05 per share for the fourth quarter of 2004, and $0.20 - $0.25 per share for 2005. "
Since then, they have announced several deals that were expected to be accretive to FY05 earnings.
And now, nothing mentioned in Q4. I find the silence on guidance to be curious. Why go quiet after a disappointing quarter?? They clearly had established a recent trend of discussing eps expectations, or at least revenue and pretax goals. Q4 PRs are perfect times for announcing annual expectations; heck, THK's Q1 fy 05 ENDED on the day they filed the K and issued the PR, so they know how 1/4 of their FY05 has gone.
What the Q4 results have taught me is that the SEM/SEO biz is a bit trickier to predict than I expected. Thus, I don't think THK deserves the same high forward multiple they were able to get in the past few months (roughly 30x the low end of the 0.20-0.25 range). Plus, this is a company that relies on the use of its stock for acquisitions, and so stock price is important to continue the successful pursuit of their long term strategy. If stock prices come down because investors don't want to pay a rich multiple at current prices, then they will have lost a major source of currency.
