Usually, company conference call participants are fairly polite in their questions and comments for company management. When a company has lost a lot of money, however, shareholders can turn nasty!
Belzberg Technologies (BLZ, Financial) is one such company. It recently reported a $2.5 million loss in its first quarter, which follows losses of $11 million, $2.5 million, $1.5 million, $2 million and $0.5 million in the previous five quarters! As such, shareholders have sold this company with a vengeance, so much so that the company trades for well below its cash balance, and thus became a potential value investment.
Illustrating the frustration of many shareholders with this company was Sam Stone, a private investor who gave it to the CEO on the latest company conference call. Here are some of his statements to management, who eventually had to cut him off:
Sam Stone: You had a year and a half to do something about turning around the company, but you've had one disastrous quarter after another and the cash keeps dwindling. Other than paying your salary, what reason is there to keep this company open?
CEO Judith Robertson: Well we have a plan to turn the company around, and we're executing on that plan, and we believe that the future value of the company is not reflective in the current operating performance.
Stone: At the current rate of burn, you're going to run out of money in the first quarter [of next year]. Other than hoping that someone will buy you while you're losing money, what viable options do you have?
Robertson: We have an operating plan that we're executing that is a combination of continued cost right-sizing for the size of our organization and changes in our industry, as well as pushing forward on targeted revenue initiatives...
Stone: ...If you have no substantial revenue generating sales in the pipeline, why don't you shut down the company now? Or is this just to maintain your salary and Chris Jackson's? Whose benefit are you running this company for, yours or the shareholders?
Robertson: I am running the company for the benefit of the shareholders, as is the Board.
Stone: Your results don't seem to match that. The previous company you ran went into bankruptcy; it seems that Belzberg is heading in the same direction. Why don't you close the company now and give what's left to shareholders. If you wait for the first quarter when you run out of cash, there'll be nothing left.
Robertson: The Board and I believe that the value of the company going forward is more than shutting it down. So we think that's the right decision.
Stone: Well, if you stay in business, how long are you going to be open for business until you run out of cash? How much cash do you have in the bank to weather the storm? How many quarters? As a shareholder, I'm appalled that the decision to shut down the company is not actively discussed in this call in a meaningful way...How is the way you're running this company different than how you ran your last company into bankruptcy?
While Sam Stone's approach is a tad aggressive, his frustration is likely echoed by many shareholders. Since the stock price of this company trades well below the company's cash balance, it makes sense to shareholders like Stone that the company should wind-up its operations and pay shareholders what they can.
Management, however, has decided to attempt to return to profitability. But they have not provided shareholders with any guidance on revenue/cost targets, resulting in much uncertainty. Until this changes, shareholders are in the dark as to what to expect.
Disclosure: Author has a long position in shares of BLZ
Saj Karsan
http://www.barelkarsan.com
Saj Karsan
http://www.barelkarsan.com
