Criticalcontrol Sltns Cp CCZFF

The Devil is in the Details

[Kantenah]

Although I liked the 2009-Q4 EPS, the rest of the data is troubling.  Following a quick review of the financials and the MD&A, I've decided to get out.  Like CCZ_Trader, I am unimpressed with the reduced earnings guidance.  But my largest concern is the following quote from the MD&A:

"Even if management is successful in its execution of its strategy, management will be unable to attain the historic gross margin it had achieved in the past, which was due to economies of scale associated with its Government of Alberta focus.   A reduction in the gross margin related to the Corporation’s Government business, its planned investment in management and infrastructure in Eastern Canada and continued costs related to integration of the companies acquired by the Corporation in 2009 is expected to significantly reduce profitability of the Corporation in Q1 2010 compared to Q4 2009. " (emphasis added).

If things go as they say and Q1 is a washout, then there will likely be an opportunity to buy back into CCZ (if desired) at a lower price later in the 1st half of 2010.

Therefore, I am out for now, but will keep an eye to come back later in the year.

GLTA

-K