It seems I have been locked out of posting on the Yahoo QSC board... a first for me... after having begun a series of posts labeled, The Good, which posted, The Bad, which posted, and The Ugly... which I cannot get to post. Oddly, I'm not negative on the company or the stock... so it seems SOMEBODY just doesn't want honest discussion of the stock or market action in the stock... and has blocked my ability to post "somehow"...
Here, then, is The Ugly:
1. Accounts receivable variation may be well within the expected range with seasonal variation, but that seems a thing which might be adjusted for in future planning to try to avoid reporting the resulting and expected seasonal variation as real changes in the value of the company in assets... which shows an unreal change in the business taken over time as actually altering the real value of the company. Maybe some way of hedging out the seasonal risks ? Probably doesn't really belong in the "ugly' column, but planning to smooth the performance out over time would be useful.
2. In spite of eliminating the preferred, and in spite of the buy back, shares outstanding INCREASED... which increase was almost significant enough to dilute out the impact of all the shares bought back thus far in the basic share figure, and almost significant enough to dilute out the impact of the elimination of the preferred in the diluted shares figure. The annualized projection of the shares outstanding is noted as net of additional buy backs... so, it looks like going forward the entire impact of any share buy back will actually benefit shareholders instead of barely covering a transfer of ownership of the company from shareholders to management by dilution as this report shows. The key metrics in progress on share structure reported this quarter were entirely wiped out as a result.
That raises a couple of concerns looking forward...
First, of course, is the concern over whether or not this is a one time occurrence... or a pattern that will be repeated... which shareholders are right to question with fair amount of suspicion given market experience. It makes a big difference whether the dilution seen was shares removed from the bucket with a dipper, or shares pissed out an open hole in the bucket, which, as happened this quarter, can drain value out faster than value is added.
Second, is the meaning relative to the conduct of the share buy back plans being executed. The buyback in the last period clearly had price limits, which kept the stock price tracking along on the 120 MA, or around $4, with little else, making it appear the effort was designed to maximize shares bought in at around a fixed price. I'd be happier, looking at the report today, if the buy back had done more and done it more aggressively... both in order to get the basic shares outstanding numbers back into a better balance, and in order to use the effort to "maximize shareholder value" as opposed to "buying shares in cheaply". The difference is critical. If the buy back resumes again soon with a goal of buying shares cheaply, instead of maximizing value... I'll find that disappointing. My disappointment probably won't matter very much, but the share price now probably depends more on expectations in that effort than anything else.
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