BrandPartners was out with Q1 numbers earlier this week, and it took me a couple of days to get to writing my thoughts on their performance. When I looked at the numbers I simply got ill.
Here’s the long and the short of it: The corporate performance in Q1 was atrocious. Revs: $11.1 mill vs $14.6 mill a year ago. Losses $1.2 mil vs $1.8 mil gain over last year.
It is often said the market’s job is to divorce you of your hard earned gains at the point of maximum fear, the market bottom.
I have been sitting with 100,000 shares of BPTR with a cost basis of $.60 for about 18 months, and I am officially throwing in the towel.
Despite repeated promises of improving results over the last several quarters, the previously forecast results have not materialized.
As if to add insult to injury, this year the company’s compensation committee decided to drop the employee option program to $.50- they are rewarding poor performance. Sounds like a government job.
As a further slap in the face, Chairman Tony Cataldo did not even extend us the courtesy of delivering his melifluous tones to the conference call, despite a generous salary of $30,000 monthly- for what, I am not sure.
In all fairness, Cataldo was instrumental in negotiating the company’s restructuring several years ago and pretty much singlehandly put the company in position to affect one of the most impressive turnarounds in history. It was impressive. That was then, this is now. What have you done for the shareholders lately?
Also, it would seem the company’s bets on Graffico and BrandPartners Europe are flops to date. Based on management’s comments, Graffico seems to be gaining some traction, but BP Europe has yet to generate a dime in revs, despite ongoing costs in the range of $1.2 million annually. The earnings could clearly use that money.
Since I have decided to unload my shares and take my lumps this will no doubt be the bottom. As I stated, it is the market’s mission to divorce you of your hard earned capital at the bottom. However, I have better uses for this money and feel there are better places I can put it to gain it back. In addition, my portfolio was extremely profitable in Q1 (see DXCM- a company that delivered on promised results). I could use the tax loss.
Here’s a weekly chart going back to the Fall of 2004 when the company was performing beautifully.
Since the chart measures the stock price week by week, you don’t see the capitultion down to the current pathetic price of $.28. It is probably a buy here because it represents a heck of a value if they do turn profitable for the year as CEO Brooks predicts. The long term 61.8% retracement level has given way dramatically- very bad technically.
There is risk in the mic rocap world. Sometimes I sell them simply because they act like mental portfolio cancer. Cancer is best cut out so the patient can get healthy.
Many apologies to those who are getting their brains beat out on this one along with me. All I can say is I believed former optimistic predictions of a return to profitability and growth.
If they get back on track, I can always buy it back.
Comments and questions are welcome.
Are you still covering this dog? I a portion of my position along with you last month, but I was surprised that the stock hasnt moved with the announcement last week that they are exploring the proverbial “strategic measures” to enhance shareholder value, including a sale of the company. I still think this is a diamond in the rough, but I take everything from mngment with a grain of salt.
Editor: Maybe they should sell the company. They have certainly totally failed at being a public company, after a reasonable run for the first year. I would continue to cover them if there was any reason to. If something changes, I will cover it. I still have a few shares I wasn’t able to sell, but as far as I am concerned this one is a complete loser despite management’s continued assurances they were headed back in the right direction. Quarter after quarter- it was next quarter. In the meantime, they are funding an expansion that is simply not working- especially in Europe. Very disappointing.
Any thoughts on this one; it looks that their last quarterly numbers weren’t too bad yet the stock seems to be falling. Looks to be out of favor wit Wall Street.
Editor: If you have read my commentary on this one, you know I simply took my losses at $.30 after the March quarterly numbers came out and moved on. The company simply is not delivering anymore. It was a really nice company until they decided to fund an expansion program. There is nothing wrong with expanding. However, to date their expansion efforts have simply failed. They killed the profitability and have nothing to show for it. Just losses. In the June quarter they notched a very small profit.Once I sell them and give up, I generally don’t go back- the one exception being CPNE which I never gave up on. On the plus side, they did get rid of chairman Cataldo. To his credit, he did do a great job positioning the turn around. That was three years ago. Since then he has been getting $30k per month for doing nothing as near as I can tell. If it starts behaving better, I might have another look. Until then, I am on the sidelines.Â
What’s up with the volume today? Over 1.2 Million shares traded on no data that I can find. Any ideas?
Editor: Very interesting. I didn’t notice. Looking back at the time and sales, almost all the volume was one trade. I don’t have any intimate knowledge of who the seller and who the buyer was. However, if I had to guess, I would say someone bought a large block from a another entity that has been a consistent seller. This could be a precursor to a rebound phase in the stock. Someone could be trying to clean up the overhang so it can move higher. Nice catch. I will be keeping an eye on it now.Â
One of the institutional owners, Heartland, has filed a 13(g) indicating that it has reduced its share below the 5% threshold; thats well over a million shares sold in the last sixty days and explains the stocks drop on relatively good news recently. The company is now officially up for sale I hear, and that should produce some interest. I expect that bagging Cataldo will help projections going forward as his salary was clearly hurting the P/L. I am hoping a sale could bring close to a $1.00 a share.
Editor: If they had sacked Cataldo and sacked BrandPartners Europe, which has been a complete failure, some time ago, several of those losing quarters would have been winners for a cash flow perspective. Perhaps there can be a sale, but I believe $1 is too optimistic. All of Brooks expansion efforts have been total failures. Truly unfortunate.Â
I took a loss a bit earlier than you, but call me a glutton for punishment – I am back in BPTR. They were back in the the black in Q1 of this year, Tony Cataldo (who seems to leave a trail of tears wherever he goes) is gone for good, and Brooks is optimistic that business will be good over the near-future.
Would love to hear your thoughts on this.
Thanks.
brandpartners.blogspot.com
Editor: Had a quick look at the last quarterly numbers- not bad- a step in the right direction. Buying fallen angels can be a great strategy if you have patience. Remember, CPNE was a $.16 stock in December of ’05 after a horrendous year and a lot of mistakes. Would like to see BPTR show some growth, but as you know their growth strategies have all failed.