RE:RE:Thoughts on earnings reportAll numbers are down. Agreed theatre business is extremely challenging during Covid and it was unpredictable. IMO, no management team would have done better. However, during Covid with people at home gaming consoles sales and all electronic gadget sales have been booming. Enough, that today there is a general shortage of high-performance chips that will not resorb for at least a few quarters.
Unfortunately, D-BOX appears over the years to have mismanaged the strategic opportunity to diversify away from the theatre business and now it is paying the price and it is getting very late.
They do not yet have any agreements in place with a gaming console manufacturer and more importantly they have no cash to negotiate. Try to go see Sony or Microsoft with at best a few million $ to spare while losing cash from operations every quarter and the bank having the rights on your IP. You will never get a deal and you will be lucky if you get a meeting or if they return your call.
Maybe one of their new partners such as Ubisoft can pull it off for them (that is what I would try to do) but the cost would be extremely high on future sales and cash flow. (I would also be curious to see the recent contracts with the gaming companies)
Back to the financials, the balance sheet is a mess, with a quick ratio (excluding the prepaids and inventory that are not liquid) barely covering the bank debt and payables. The cash balance since March 31 is better because they got long term debt (not very long term!). Operations continue to eat up a lot of cash despite a downsized structure.
Their best bet for DBO would be to become private away from quarterly scrutiny which makes their issues obvious. Another scenario is that one of these New York Funds who has all contacts buys the debt, gets control of the IP, injects the required cash, puts in place a new management team to then repackage and resell within a few years for a very juicy profit. Unfortunately, under this scenario no value will be created for current D-BOX shareholders. The debt is currrently worth more than the equity.
For D-BOX, time to put in place strategic alternatives is running out. Stephen Takacsy was so right when he first mentioned over a year ago the need for such a review. Not only did most the then Board members not listen, actually many have since jumped ship.
GLTA, need to see much, much more before I buy this stock again. I see much better opportunities in the market on a risk adjusted basis. If management can pull off a miracle, I would rather pay more for a less risky proposition.