RE: Massive FloatI've been watching from the sidelines since I unloaded my considerable position earlier this year in the .28 -.30 range. I have been looking for reasons to buy back in but week after week, quarter after quarter I simply can't find any. I am today taking AZURE off my watchlist and here is why.
Today, Raymond James downgraded their 12 month target price on Azure from .24 to .15. This from a brokerage that underwrites almost all their financings, and follows an August downgrade from .40 to .24.
I listened to the conference call last week and was shocked by three things:
1) How few analysts took part...there were 2 or 3 questioners total. Yet the MD&A is basically the same blue sky potential stuff we've been hearing for years. At least I didn't hear the term "sweet spot in the market" this time around. And revenue guidance continues to trend lower and lower each quarter. Better revenues are always just around the corner with Azure.
2) How very little if any talk, either from management or from analysts there was about the share consolidation management voted on months ago, which can be done anywhere from a 25-1 to 40-1. The stated reason to reverse split was to get the price above $5 to get a NASDAQ listing. Even at 40-1 the current share price won't get close to $5. I was surprised at how management was not queried on the the logic of announcing the intentions of such a reversal and then not doing it while the shares were in the .20s. Basically, management telegraphed this share collapse by annoucing their intentions and further hurt eroded shareholder value by not implementing the plan.
3) How no one discussed the fact that with recent additonal financings Azure is now close to 1 billions shares outstanding. This is simply ludicriously high and makes it next to impossible for Azure to ever make money per share. I also noted, as others have recently that THE HIGHER THE REVENUE THE MORE THIS COMPANY LOSES. That means the margins are so negligible that it also makes more sense NOT to sell product than it does to sell product, at least in the short term. God help me, but the poster Isaak was onto this factor early with Azure and I just swallowed the management line that margins would improve. In the 7 years I was invested in Azure profit margins were always negative or nearly negative. Now that they have moved from an R&D into a production phase the margins still suck. That can't be good for shareholders.
When I was a shareholder I was personally told by management that a share reversal would not be considered until there was at least 100 million in revenue per annum. They are not even halfway there revenue-wise (this year, a record year for revenue will come in around only 40 million) and a share reversal is now perpetually on the table. Management either misled me or changed their plans in very short order, all to the detriment of shareholders. I'm lucky I got out when I did at a small profit, but would have got out earlier in the low .40s had I not been misled.
I note that senior management compensation is still in the low-mid six figures and that management has been doing NO buying of shares on the open market over the last six months, at least. The BOD needs to answer for awarding egregiously high salaries when the share price is down 72% for the year and 90% over the last 5 years. The last time the AGM was in Toronto I asked about this disconnect and was basically blown off by Mr. Deacon, Chairman. I think the question is as valid now as it was then.
Some might fairly ask why I am bothering to post when I no longer hold shares. Fair enough. But up until today I still had AZD on my watchlist and was considering buying back in, if I could only find a good reason to do so. I have not and will not, and I felt compelled to share why.
I wish current investors good luck and hope people here are finally rewarded for their patience.
El Joro