Understanding VertigoScope Hi All,
Lots of enthusiasm out there about the cash position and the transformation. I don’t share the enthusiasm for either because the cash position isn’t sustainable and the transformation is a fraud.
Speaking of fraud, try to understand the machinations behind the Hail Mary investment in VertigoScope. Looking over the past 3 years it has been nothing but an unmitigated disaster.
Debt at the end of 2016 was $122 million and revenues were $71 million. The debt to revenue ratio was 1.71. At the end of 2018, the debt was $180 million and revenues were $89 million. The debt to revenue ratio had grown to 2.03. Debt has grown by $58 million while revenues have grown by $18 million. How does that make sense to anyone in the short and long-term?
Don’t get me started on the profitability or return on investment. Growing your debt at more than three times the rate of revenue growth without showing any growth in profitability or any cash return on your investment is further evidence of the incompetence at the top of the house. You pay $180 million for 56% of a company that keeps stacking up debt to hide the fundamental problem with the business – it isn’t competitive with leaders in this space. Hence the reason it got no attention in the 4th quarter reporting.
The penny has dropped as far as recognizing it continues the uninterrupted string of bad investments and decisions.