Email : info@otcjournal.com
URL : http://www.otcjournal.com
To
OTC Journal Members:
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"Twas
the night before Christmas...." |
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In December of 1822 a poem
was written by a literature professor at Columbia College (now University)
to amuse his children.
The poem was originally entitled
"A
Visit From St. Nicholas". One year later it was published anonymously
in the Troy Sentinel, submitted without the author's knowledge by a house
guest who obtained a copy.
A New York publisher later issued
the poem, and was advised nearly universally by critics of the time that
it was a waste of paper and ink.
However, as usual the critics were
wrong. This unheralded verse managed to hang on, and after the author's
death it was illustrated with drawings from Thomas Nast and became very
famous.
The author was Clement Clarke
Moore, and the poem began with the phrase "Twas the night before
Christmas...."
So much for the critics. Have a wonderful
Christmas. Remember, the gifts that are around you are more precious than
the gifts you unwrap.
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Envoy
Communications (NASDAQ: ECGI) Announces Year End Results- Santa in Nowhere
to be Found |
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Over the Long Term Market
Price Action Always Tells You What's Happening Even When the Company Doesn't,
and the Market is Rarely Wrong.
The Editors of the OTC Journal
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Envoy Communications held
a conference call this past week to discuss its fiscal year end results
(end of September). Santa was nowhere to be found. Based on what we learned
from the call the stock has dropped from the mid $4 range to just under
$1 in the past year because it deserved to.
The company revealed an abdominal
4th quarter where they lost $2.2 million EBITDA. Although they ended the
year with just over $80 million in revenues (up 38%) and about $7 million
in EBITDA profits (down 30%), the trend towards losses is very disturbing.
We have been in a tough market environment
for many companies, and Envoy has not been left out. Of the $2.2
million the company lost in the 4th quarter, $.5 million is attributed
to shutting down the Communiqué division, and $1 million was attributed
to Sage Consulting, their technology division which will probably continue
to lose money.
The only bright spot was the performance
of Watt Group, their International design and consulting firm. Watt is
profitable and now represents 50% of the company's ongoing revenue stream.
As seen in the chart, the recent
rebound in the stock has dramatically reversed course as a result of this
disclosure. In our last edition on Envoy we felt the stock was destined
for higher levels. In the short term, this past week's financial disclosure
sabotaged our prediction. Sadly, we were wrong. It's not the first time
and it won't be the last.
However, these financial results
are a snapshot of the past. We are concerned with the future. In the conference
call the company indicated they expected to make $8.6 million in EBITDA
profits next year.
December quarterly numbers are expected
to be lackluster, and they are expecting improvements in the March and
June quarters.
The editors of the OTC Journal
are very disappointed that management never gave any ongoing public disclosure
concerning their 4th quarter performance. Many companies are falling on
hard times, but most of them are choosing to inform the public as disappointments
occur.
It is evident from the performance
of the stock that someone knew the company was doing so poorly. Unfortunately,
it wasn't us.
We still believe the stock will rebound
to the $2 level, although it may take some time. Recent new contract wins
have resulted in surges in the stock price, suggesting the market wants
to believe again.
In the next week the stock may suffer
from the final week of potential tax selling. If you see the stock down
near $1 it should be bought for a January rebound.
Still to come: Year
end wrap ups on XMLG (big stuff happening there), XMM (our favorite for
2002), and CODX.
Charts Provided Courtesy
Of TradePortal.com
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