Well it's OK to disagree(on the financing) when we are on the same team. Yes I am optimistic about the Avid prospects, but if I were not, I would not be buying more shares, but lets get back to the expansion and the financing.
The real question is, should Nick have embarked on a huge expansion because in the short term, it looks like the share price has really taken a beating? On the other hand, had he not started the expansion and secured the "brilliant"(my opinion) financing, the shares never would have run the way they did which made a lot of money for a lot of shareholders.
Whether it was a brilliant move to do the expansion when he did, will take some time to play out. Had he tried to do a financing now, I do not believe he would have been able to secure any funding, and if he did, it would have a rediculous high interest rate and very onerous terms. Plus I am sure the state of the art technology equipment and construction would cost at least 10% to 20% more.
But all of that does not really matter....what does matter, is if Nick is able to fill up the capacity and start making the kind of margins they are projecting at $400 million plus. I don't know if it was really bad timing, as sometimes you have to do an expansion when you are able, as in the financial conditions at the time allowed him and the board to make this move. So yes now things have slowed down....but is that a short term situation or will they never fill their capacity??? This we don't know yet. I am buying shares because I do believe that Nick was not necessarily caught off guard here with the slow uptake in filling capacity, and probably knew that it would take some time. I also believe he did look at the downside at the time, and the board decided the risk was worth it, and they had a plan B in the event it would take longer to fill capacity then they previously believed(hence the line of credit, etc). I would be very curious what models and timelines they looked at originally to fill out capacity?????
So in the end, whenever you expand and venture into new areas there is a certain amount of risk involved. But without this, you will never grow your company or your share price. I think based on the information they had at the time, they made a pretty decent call.....and if you asked them again today, they probably would all agree that this was the best move at the time and will prove with time to be a "brilliant" decision.
I agree with you that the stock did often move higher ahead of earnings and always wondered who knew what at the time???
So yes it will take time....I am hoping the 3 year timeline will play out, but am ready for the longer term also because I believe Nick will find some way to get it done. Good luck to us all!!
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