RE:RE:RE:RE:RE:Why did the buybacks stop @MIkey
You make some good points, but there are a few where we don't see eye to eye.
Looking back at some of my recent posts, you'll recall I've taken somewhat of a different view to some of these items.
With regards to financial leverage, the new credit facility and the $80.3M they drew from it earlier in Q2, all they've done is bring their financial structure closer in line with industry norms. It obviously would be great if they were able to continue to finance their activities through equity and cash generated through operations as they had until recently, but judging them against their peers, that isn't realistic and they were actually putting themselves at a disadvantage when you consider that the industry average debt/equity ratio for technology companies was at 0.39 in Q1 2015. With Avigilon's product mix being split between software and hardware sales, their ratio should have been somewhere between 0.39 and 0.56, according to the latest
CSIMarkets data, depending where you put their product mix along the software/hardware spectrum. By taking on this new debt, they've brought that to somewhere around 0.24-0.25, which is still very good compared to industry averages. All in all, I think this recent move bodes well in terms of improving their growth prospects and shareholders value, given it also limits dilution.
Something else interesting I noticed is that technology industry debt/equity has inceased to 0.45 in Q2 2015, based on those companies that have reported up to now, which makes Avigilon's position look that much better in comparison.
Now as far as receivables and inventory levels are concerned, when you consider they grew Q1 sales 35.3% from 2014 to 2015, but managed to keep receivables and inventory growth a lot lower, at 4.2% and 2106% respectively, while lowering their payables by 9.8%, I'm guessing partly due to better pricing on components from suppliers, it seems to me they actually have very good financial management controls in place, not the other way around.
You also say they aren't swimming in cash, which doesn't seem quite right to me. The $80.3M they drew down on their new credit facility was justified as a way to replenish their coffers following recent acquisitions. Now, if they had used debt to finance those in the first place rather than doing it in hindsight, which as some say is usually 20/20, they would have reported a cash balance of just over $130M at the end of Q1 2015. With the buyback reducing that to about $90M before other expenditures, it seems to me their cash position should be doing just fine.