7 of 7 – North American Ops And Motivation For Reinvention Posted: 16 Dec 2011
The November 16
th New Blog entry was titled ‘
Get To Know The Subs.’ It kicked off a series of blog entries providing insight and background into each of NewMarket’s subsidiary operations that in total contributed to approximately $118 million in sales with a net income of $2.5 million in the last fiscal year (2010). In reaction to changes in the economy and corresponding changes in the OTC market, where the common stock of NewMarket is traded, the Company has announced the pursuit of a reinvention plan. That reinvention being founded on the “
yet unrealized value of the Company’s operating subsidiaries.” Hence, the series of blog entries about NewMarket’s subsidiary operations.
Today is the 7
th blog entry since the ‘
Get To Know The Subs’ series and it is about the 7
th NewMarket operation headquartered in Dallas, Texas. The North American operation headquartered in Dallas is technically not a subsidiary. The operation is not contained within a separate corporate structure, as are the other six operations. The North American operation initiated in 2002 with an
asset purchase from a private technology services company. The management of the private company came with the asset purchase and became the senior management team at
NewMarket. That management team has been augmented since 2002 through further acquisitions and hiring and remains today in various key roles.
Since 2002, the North American operation has been a value added reseller of brand name technologies to include Microsoft, Cisco and Sun. The ‘value add’ includes installation, custom programming and maintenance services. The range of large and small corporate clients crosses a number of industries and has included Fortune 500 companies such as
AMR ,
Maersk and
CSX. Expertise from the North American operations has from time to time been deployed to augment services provided throughNewMarket’s foreign operating subsidiaries.
Counter to the general economic conditions in North America since the onset of global financial crisis, NewMarket’s North American operations have otherwise been strong compared to previous years – until recently. The North American operations suffered an unexpected, sudden and dramatic drop in sales this year reported in
the Company’s second quarter financial statement for 2011. The impact to the overall Company resulting from the drop in North American sales was recorded in a ‘Going Concern’ statement included in the second quarter report. The cash flow generated byNorth America operations has historically funded corporate management expenses and costs related to being a public company. The global financial crisis appears to have caught up toNewMarket with the recent drop in North American sales playing a central role in the Company’s drive to reinvent itself.
This blog entry concludes the series started with ‘
Get To Know The Subs.’ If you have not already, review the eight, in total, entries chronicling the subsidiary operations to include the North American operation highlighted in today’s entry. NewMarkethas six solid operating subsidiaries outside of North American and one ailing operation inNorth America. The one troubled operation is a key one since it is supposed to carry the overhead burden for the overall Company. Stay tuned to the ongoing NewBlog entries to see howNewMarketpursues its reinvention to leverage the value of the solid operations in an effort to overcome the set back inNorth America.
