Well, the delinquent numbers have finally come out, and there are a couple of nasty surprises in the disclosure. I will need some time to digest the whole thing, but here’s my initial reaction.
The company delivered $122 million in revs and reported a loss of $24.4 million. However, they took non cash write downs totalling $25.5 million in their Communications and Global Brands Divisions- meaning, their cash flow really wasn’t too bad.
Here’s the big negatives in my mind. First of all, TTGL clearly has problems in the Oblio Telecom division, which was the acquisition and turn around story that got the company headed in the right direction in the first place. In today’s press release, they admit their internal switching facility, which was supposed to decrease costs and increase margins, has been a complete failure. Hence, the reports of card failures in December and contentious relationships with distributors. They claim they will evolve back to a straight marketing company without the hardware or network, which doesn’t give investor a warm and fuzzy feeling about the management team.
Secondly- USA Detergents seems to be problematic as well. Apparently, the bought a very distressed company, and have decided the proper direction to go would be to shut down the operations and outsource the manufacturing. Therefore, all they bought was the label itself, and this division is contributing nothing but losses.
The Energy division is chugging along adequately, albeit no barn burner in the profit department- perhaps there is some substantial upside here.
I’m not surprised the stock is not selling off today. They will probably lose the dreaded “E” on the symbol tomorrow, and move back to the normal listing.
I’m also not surprised they needed the extension to get these financials filed- I’m sure there was major debate on how to book the writedowns for the various divisions. It looks to me like the accountants chose the most aggressive direction on writing down the value of the assets.
So- where to from here? I’m pretty sure all this bad news is already priced into the stock. A couple things need to happen- first and foremost- the management needs to hold an open ended conference call with a complete question and answer period open to anybody and talk about all the issues facing the company.
Simply looking at the hard numbers, the company is trading today at about a $45 million market value on $122 million in revs (nearly $1/2 billion annually), and they didn’t lose much hard cash. The energy division is probably worth more than where the stock is trading on a stand alone basis.
However, they recently bought another division- the shoe manufacturer. If the integration of this division go as smoothly as the past ones have gone, one can expect the roller coaster ride to continue.
I suspect there is some upside in the stock from here. Something good is bound to start to come out and turn the tide. However, this is no Berkshire Hathaway mini clone. Right now, its a stumbling, bumbling, de “worsified” company that needs to get back on track. Their turn around initiatives don’t seem to suggest the management is very skilled.
Bottom line- I wouldn’t be a seller right now- it’s all priced in already. On a rebound we can start looking at options and consider the future. By then, we will have more information.
I sold today. My problem is not the performance, per se, which is bad enough, but the great gap between the promises and the deliveries. There was just too much happy talk from managers who were accomplishing so little. Now, when the mediocrity is revealed, there is no conference call at all.
We don’t really invest in companies, we invest in people. Warren Buffet says that he “allocates capital” for a living. I see no reason to allocate my capital to these guys.
Editor: I don’t blame you one bit. This turn of events really calls into question the talent of the management- and now, they have more assets to really screw up. The problem could become bigger, not smaller. If the company does not become very vocal about future plans, I will be suggesting locking in the losses as well.
Well, the stock is basically back where you recommended it in ’06….at around 80 cents. Surely the potential is bigger now at this juncture (with huge revenue number, decent cash flow and bad news disclosed and accounted for …..) If you liked it back in 06 at this price and lower capitalization, is it not now a screaming buy or did you change your view of management so significantly that you cannot recommend TTGL so glowingly anymore?……. I look at all the other OTC Journal stocks and everyone of them (besides Apple) looks in much worse shape financially, so I still like this one the best…….
Editor: All good observations except for one main issue- at this point, I don’t trust the management team to execute. The Oblio Telecom turn is particularly distressing to me. They were very vocal about the moves they were going to make towards greater profitability by creating their own infrastructure. They did it, and failed miserably. The theme of the company- using the leverage of debt, they buy distressed brands and turn them around. If the plans they put in place are total failures, now they have much larger businesses to fail with. Nevertheless, their current operations are certainly worth a lot more than where the stock is trading. That’s why I feel the stock could get a bounce once they start publicly explaining and defending a lot more aggressively. I would always prefer to have a mediocre business and strong management over a great business and lousy management. It will be interesting to see where we go from here. I haven’t gotten a reply to an email asking what the next step will be.
sorry to say this but the truth is you will continue to push this company and others regardless of whats going on with them because you been paid to. you talk about ssl but if your not glued to your computer we go right though them before we can take any action all your comments are after the fact.
Editor: That’s simply BS. The SSLs are prominently posted on the left hand menu at the home page. I have extensively covered exactly how to use them. Using them is your choice, not mine. If you don’t, it’s your problem. I can’t sit at your computer and trade for you. I also can’t decide for you if you want to be long term or short term. In the case of this mess, I am calling it like I see it. I am now on the fence as to whether this is even a good long term hold as the management team has now proven they are totally inept. There are dozens of example of companies I got paid on where I turned “negative”- how about CPNE at $.75? How about that damn NCNC mess- I got paid on that one, and the CEO delivered nothing. I dropped it at three times its current price. UCMT? Twice the current price. If TTGL doesn’t become very vocal about defending itself and talking about righting the ship, I will suggest moving on completely as well. In the interim, why don’t you have the intestinal fortitude to take personal responsibility for holding down through the SSL- I can’t do your trades for you.
I agree with your assessment that the managemetnhas bumbled and stumbled, I am not sure I agree with the assesment that the screw up are fully priced in yet. The energy group may have sales, but no margin or profit, any postive assessment in that area, needs some financial confirmation. It looks like they don\’t really uderstadn what they are buying and they have demonstrated little or no expertise so far, and really poor DD on the low end detergents business. The last gudance was for nearly $3/4 billion in revs with earnings at $0.24 or higher…that kept me in…now they have continued losses AND rev\’s down by 30% or more….I don\’t see the value you do.
Editor: Here’s the most distressing issue. Their theme- buy distressed brands, bring in expertise, turn them around, and create value. For a couple of quarters it looked like they succeeded nicely with Oblio Telecom by increasing margins by building their own infrastructure. Here’s what happened- they failed miserably. So, what does that tell us about the future? Now, they have several more, larger businesses to “turn around”. This could simply lead to much larger losses as they screw those up as well. On the other hand, despite their stumbling and bumbling, they still have huge cash flow and pretty big business at nearly $1/2 billion in sales. If they become vocal and start explaining themselves, it is worth looking at. I still believe there will probably be some sort of bounce eventually. After hearing it all, I will make a very public decision about where I believe we are headed.
I was waiting for your comments. I was going to be a seller but I too think that this news was factored in the pricing…. I hate to say it but for the time being… this is a hold for me.
Editor: Me as well- disgusted. Waiting to hear more.
I guess I hit a nerve Bad News already priced into the stock some upside from here all in your blog dowm .23 good job
Editor: Perhaps. I’m trying, but I don’t run these companies, and I did find some very profitable ideas in this space for investors in the last month. Here’s the current issue- how do we manage the current Bear Market?
Nasdaq listing my ass. I think their most over used quote in all there releases and calls was “shareholder” value. It should have been “bagholder”.
Editor: A NASDAQ listing is a joke at this point. Are you kidding me? What about their fiscal ’08 projections? How about that for a joke. However, financials and retailers, the worst two sectors in the January demise, are bouncing. Building stocks were moving up this past week on worst case earnings releases. Sometimes, things are just too cheap. Let’s see what happens from here. I still need more information.
Titan is getting sued by several distributor of their phone card division on Oblio Telecom. They are the biggest thief in the industry and defrauded millions of consumer not delivering the minutes on the calling card…
Editor: I have heard other reports of this, and no doubt this is why the stock cratered in December. They should have been totally transparent about the event in December when it happened. Calls into question management’s ability to be honest with investors.
I don,t think there is much upside from here . If you look into their filing they used almost 9 million in cash flow in the first Q and are delinquent on some creditors because of their cash flow problems . The Aapco purchase will not provide enough profit margins too cover all the bad investments they have made . I have lost a lot of money with these guys and I fell for all the lies and deceit . The truth of the matter is that as soon as these problems were happening then we should have been informed as part of disclosure . I think SPKL is a potential winner right now but who knows if their profit margins can be enough too double or triple their stock.
Editor: Thank you for the input. I would point out, they gave back the $9 million they made last fiscal year, so if they can right the ship, perhaps they can perform. Who knows. I just know it’s not over yet. On SPKL- I believe the issue there is time. There is no doubt the company will be at least 4 times its current size within a year or two- but as you point out- what about the stock? I believe the most likely scenario is they will get up to about 100 stores open in 18 months, have 200 to 400 more to open, and they get bought out. The challenge is where does the stock go in the short term- say the next six months? I really can’t say for sure.
Went to their web site today, Investor relations,stock price, report is $1.10 for price on 2/1/08. This tells me that we are dealing with a complete organizational breakdown.
Editor: Their quote feeds are still pulling off the old symbol. Again, more evidence of incompetence.
TTGL is the second desaster after CPNE. As the famous Fidelity manager Peter Lynch said: Invest only in companies if you can explain your decision to a 10-year old within 2 minutes. AAPL is such a company, and SPKL might be one as well. But stick out of BS like CPNE and TTGL, where nobody ever really understood who they are and what they do. You only get your fingers burnt and all other readers get their ass kicked as well. Go with the simple story, it’s often better.
Editor: Thank you- excellent suggestion and a good philosophy for both small and big stocks.
Gentlemen: Having been a follower here for over two years, here is an observation, in the fwiw category. Use the SSL every time. Every time. TTGL had a $1.73 SSL on it and everybody would be out and less unhappy had they done so. Hope is not a reason to hold thru the SSL. Neither is “waiting for more news”, because SOMEBODY knowns something or the stock would not be going down. Sometimes you will be ‘wrong’, but mostly you will be right to get out at the SSL.
My other observation over these two years is that it is best to take profits when they are offered, especially when you get a pop like most of these have. If you double your money, walk away and wait for another entry point or just forget it. Most doubles occur in the first few months. Doing that often will beat the pants off of any other returns you might get. Think SPKL (which is at a good entry point now but was at $2.00), EFSF (was at $.50), NIHK (more than doubled), etc. My point is, microcaps rarely seem to break out and become the ‘next SBUX or MSFT’, our leader could only cite one, and that has come back from $20 to $4. So, fwiw, take profits, early and often, and use the SSL to avoid becoming a long term bagholder or worse, complete loser as TTGL is heading to be due to incompetent or venal management. Considering the Oblio news, it may be the latter.
BD
Editor: I’d like to see just one of these idiots not sabotage their own success for the very long term. Typically, what happens- the really good ones get bought out before they can become multi year legendary stocks. I believe that’s the way SPKL will go once they have 100 stores open and are going for 500.
Why is there no word of a CC, and after the call what kind of bounce can we expect if any.
Editor: I am making the assumption there would be some additional communication down the road. If the 10Q and the press release is all the communication they are going to provide, it will be time to just take the pain and move on.
I’m new with this stock and the market on the whole. Explain to me please. If the shareholders actually own the company, then is it possible for them to remove the management? How much power do shareholders really have. I own 10,000 shares and thought I’d hold long term. Well, a year. If they’re young and removed, they will have no future. If they’re old and don’t give a hoot, then vote them out and try to find someone who gives a hoot, and still has something to hoot with. So, I’ve heard of shareholders voting management out. Can it be done, or do these shareholders just like to complain. You seem to feel if management would only speak out, it would help. Even ETrade management finally spoke out, and when they did I doubled my investment, this week. If these guys haven’t the fortitude to speak up for the company that they are responsible to improve, then let’s vote them out. Maybe their next job will be in China, or even better, Iraq. Once they’re gone, then, then find someone who is capable of making this company what you thought it could be a year ago. One thing though, let’s make sure we don’t pull an ETrade, and pay a looser $10.9 million just to get off the premises. Maybe he wasn’t totally stupid.
Editor: There are a couple of major shareholders who financed and built this company behind the scenes, and they appear to be intimately involved in digging in and cleaning out the cancer. I can tell you they are besides themselves over management’s failure to manage its plan for enhanced profitability. It’s pretty short term, so let’s give them a week to come up with something. If they don’t, sell it and move on.
where do ‘sellers’ get their info, there wasn’t any news about anything negative, yet the stock sold off due to recent events, where/how are people finding out news that the rest of us aren’t privy to?
Editor: Good question. I didn’t have any information, but plenty of people who were close to their telecom company contributed rumors that there were problems. Probably people close to the day to day operations had a feel for what was happening.
I think the FEDS should look into this beause as you said a lot of people lost monet on this one and I’m sure management didn”t if you go to there web page it show them still trading at 1.00 as of 2/1 all bs
Editor: You never know.
There are some very excellent BLOG entries on the TGLE meltdown from OTC readers……I agree that OTC Journal has been very good in finding companies that made significant INITIAL moves and one should get in, make a double or so (very respectable profits….) and NOT, NOT, NOT count on any sustained upward move on to the next good OTC idea. Almost every OTC idea that I liked made money….initially. But almost always these good ideas that actually made money at one time go off the rails after a while and often in a big way. Think HESG, NTWK, USEI, AGSI, TTNUF etc……point is that I made a good deal of money on all of your suggestion but IF I had looked at OTC as a good bird dog finding interesting companies, used the good ideas to make some good, quick money and walked away……my overall score would be a lot better……So TGLE has finally brought this point home: OTC has great ideas but I should not count on these ideas to last very long. A company can trade well on a good story (potential…..) and you find the good stories….but you also (here is the criticism…) but maybe it is impossible to find the true story of the financial situation, the caliber of management, their banking relationships etc…..Seems all too often a great mgt team is all of a sudden totally inept, a great story of business turns on a dime and goes from wonderful to horrible…..In the future I will look at your suggestions, evaluate them, make a move and be content with 30%-100% and walk away……..happy with your valueable work.
Editor: Over the past two years, you are absolutely correct. I guess the moral of the story is to get in while they are cheap, and sell when they are charging up the charts- a couple of real notables have been CPNE, PNWIF, NIHK, and SPKL. These were all triples for a while. Right now, looking long term, the ones that do look like they have the potential to be great long term winners are SPKL and PNWIF. NIHK and EFSF have the potential to pop at any time, but both need positive corporate developments. One of these days I will find an idea where the morons in management don’t sabotage their own success by blundering, and has a good, multi year growth event. Your observation points out one tried and true method for investing success- load up when they are cheap and no one wants them, and take some money off the table when they are hot.
THE PROBLEM IS: Titan Energy was created to bring them out of the hole!! the management team that built APPCO is gone. They are lacking experienance in the top level managment. There is no one in Blountville TN to take Titan to the next level. Hang On!!! This will be good!
Editor: I guess you can follow at this point for the entertainment value. I think I might just buy some at $.20 for the heck of it, betting on some sort of dead cat bounce in here.