Why is CU in financial trouble?

Trime

CU seems to be in real financial trouble and their stock is in the toilet. Yet they seem to have a successsful coin certifying service (PCGS). I have heard on this forum that their card certifying business is a drain but have not read their Annual report or 10K. Rick Montgomery is leaving PCGS for NGC. What is really going on????

nwcs

It's a crisitunity for CU. It's a crisis they can turn into an opportunity or an opportunity that will turn into a crisis.

DesertLizard

May mean nothing.

Look at Hewlett Packard. Stock in the toilet for years and execs fleeing the last 18 months. I would still buy their printer over say a Brother or Toshiba or even IBM.

wondercoin

"Look at Hewlett Packard"

Hey- there President just quit!!

Maybe CU can hire him? Wondercoin

Russ

nwcs,

I had to go look up that word.

Russ, NCNE

crito

What is really going on????

sounds like restructuring of upper management.

CU seems to be in real financial trouble and their stock is in the toilet.

Common mistake is to associate moves in the stock market with the health of the economy as a whole. Performance of stock doesn't necessarily reflect on the financial health of the company either. They are not directly related.

Investors have lost confidence and restructuring is the right move IMHO.

keets

sometimes it's important to seperate a company's product from it's managers and that may be the problem at PCGS. Rick Montgomery may have been a big part of the problem or he may have been handcuffed by those above him so that he was rendered ineffective. at least with a private company the person "where the buck stops" can usually be named. who knows that for sure with a traded company and a board of directors and all that garbage. i've heard people mention that CU is in trouble but nothing really said about PCGS. the irony being that CU could run PCGS into the ground but that same thing probably wouldn't happen the other way around.

al h.

IrishMike

Well, since I have analyzed companies off and on for the past 31 years for a living and having worked for a national consulting firm, where I got paid money to tell CEO's and CFO's what I thought, here goes. This is a link that provides the financial reports required by virtue of being a publicly traded company.Link. The stock had dropped because of low earnings, obvious point. The company is closely held, 49% ownership by insiders, only 12% by institutional investors. Therefore there is no outside influence on the company to increase earnings, change policies etc. It is being ran like a "mom and pop" operation, therefore outside investors will not flock to the stock, as no probable earnings would be generated from a sale of the company. They have no bank debt, which means the bankers can't influence decisioning, nor does the company run the risk of losing credits lines they need to operate. Well capitalized with falling stock prices is their current situation. No need to be alarmed of any immenint collapse or disaster.

I don't know if this is a lingering problem, but they state their financial woes are a result of decline in card submissions and dealers not paying back receivables due to a slow down in sales in the marketplace. The real danger is that those who run CLCT are capable of running a large pubic company. Insiders leaving is never a good thing, its a sign of internal management turmoil. Now it can be turned into a positive if the management void is replaced with more capable people. You decide the likelihood of that.

shirohniichan

I don't see how CU can be in trouble after their brilliant marketing of WTC death coins, folkartnut's Presidential Coin Series, and other such meaningful contributions to numismatics.

EagleEye

From the NASDAQ site:

Collectors Universe, Inc. Receives Nasdaq Staff Determination Letter Regarding Delisting of Shares From the Nasdaq National Market System

NEWPORT BEACH, Calif., Oct. 24 /PRNewswire-FirstCall/ -- Collectors Universe, Inc. (Nasdaq: CLCT), the leading provider of value-added grading and authentication services and products to dealers and collectors of high-end collectibles, today announced that it has received a Nasdaq Stock Market Staff Determination letter, dated October 18, 2002, informing it that it has failed to comply with the minimum closing bid price requirement of $1.00 contained in Nasdaq Marketplace Rule 4450(a)(5). That letter stated that, as a result, the Company's shares are subject to delisting from the Nasdaq National Market effective as of the opening of trading on October 29, 2002.

The Company has requested a hearing before a Nasdaq Listing Qualifications Panel to review the Staff determination, which will give the Company the opportunity to present its position to Nasdaq as to why it believes continued listing of its shares on the Nasdaq National Market System is warranted. The hearing request will stay the delisting pending the outcome of the hearing, which is expected to be held within the next 30 to 45 days.

The Company cannot predict the outcome of the appeal. As a result, at the Company's upcoming Annual Meeting to be held on December 4, 2002, the Board of Directors will be seeking stockholder approval of a proposal that would empower the Board to implement a reverse stock split of the Company's outstanding shares should the Board determine implementation of a reverse stock split to be advisable and in the interests of the Company and the stockholders. If that proposal is approved by the stockholders, and the appeal is unsuccessful, the Board would be able to implement a 1-for-3, a 1-for-4 or a 1-for-5 reverse stock split, as it determines to be appropriate, to effectuate a reduction in the number of its outstanding shares that would result in an increase in the bid price of the Company's shares above the $1.00 bid price requirement. Such a price increase would bring the Company back into compliance with the $1.00 bid price requirement of Marketplace Rule 4450(a)(5), thereby enabling the Company to retain its Nasdaq National Market listing. The Proxy Statement for the Annual Meeting, which includes a description of the reverse stock split proposal, is being mailed to stockholders this week.

Trime

The responses to this post other than the reminder that they will be delisted from Nasdq unless they have reverse split to increase the price of each share to over the threshold for staying NASDQ have an overall positive tone regarding the future of CU.
On the other hand the David Hall thread has some more ominous sounds (see Sperber). As much as I admire the pioneering role of PCGS in the certifying business, I am glad that I was not one of the share holders. "Past performance does not"... but makes a pretty ugly chart.

SarasotaFrank

IrishMike:

You beat me to the punch. Thanks for the dose of sanity.

This is all-too-the typical path closely held companies seem to follow once public. Initial firestorm of interest wanes, outside investors cut their losses, there are no new buyers, company execs don't fill the void, there is no legitimate market maker, no buyers, declining stock price, closely held portfolios reducing in value, the millions we made by going public gone by the wayside, stock trickles to a buck, NASDAQ de-lists.

Doesn't always mean the company can't make money, but if there is no effort to expose the investing public to the company, there are no buyers. No buyers = stock price drops.

Kinda like trying to catch a falling safe.

nwcs

<< <i>nwcs, I had to go look up that word. >>

It's from a Simpsons episode.

crito

Kinda like trying to catch a falling safe.

I thought that was a falling knife, anyways NASD has been VERY lenient with delistings lately. They even suspended their own rules for a period of time after 9-11 -- I was a BNBN shareholder at the time and was in same situation. Could drag on for a while IMO. Tickets.com did a reverse stock split, buy.com went private... it ain't over by a long shot... though my days of investing in dot-coms is

BTW, believe it or not, I doubled my money earlier this year with bn.com and quickly took the money off the table