Gents,
I rarely come by and rarely post, but it looks like the stellar VTSS Mgt and BOD have opted to, well, issue some ore shares, because when you can't sell any product, or make any money selling product, how else can you pay your bills . . . you just print more money (all our Gov can do that) or you sell more shares. The only thing missing from this latest announcement is another R-Stock Split, which I suspect is in the cards as soon as the Mr. Market shits this turd down below a $1 AGAIN. Which I suspect is not far off. This turd still has a few more skid marks left in her before the final flush!
G
Posted by G - 12 years ago
Unbelievable. Evidently stock is getting killed in aftermarket.
These guys just don't quit. There has to be a corporate goal of diluting the shareholder as much as possible. Last quarterly call Gardner backed off the operating profit commitment for whatever lame reason he gave. Now he is out diluting the shareholders again. Anyone care to guess how much of the company the shareholders of VTSS pre-scandal (when they owned 100%) now own?
What will it take to fire Gardner? Evidently there is nothing he can do that will get him fired.
Posted by dlog - 12 years ago
Lets see. The stock will be priced a good deal under market thereby insuring those of us who now hold stock will sustain yet another loss. I am guessing probably 7-10 million shares at $3.00 ( and I would consider that a good price. It may well be $2.75 or lower). Privately placed into the same hands that bought the last round at $1.75 or whatever it was.
These guys are just shockingly incompetent. They couldn't get the stock up to the conversion price so will now have to dilute the shareholders even further by selling shares below the conversion price to raise the money to pay off the debentures coming due in the fall. What this tells you is the bond holders had no interest in renegotiating the debt again. They don't believe VTSS will ever get the price high enough for them to convert.
Posted by dlog - 12 years ago | Updated 12 years ago
Take a look at the companies that are co-managing this offering. That will tell you how low VTSS has sunk. I have never heard of any of these guys and I have been at this 20+years.
Posted by dlog - 12 years ago
lets hope it prices over $3! our fearless leader has talked about "NEW Markets" Storage being one of them, perhaps the proceeds will be used for such noble causes.
Posted by GARIF - 12 years ago
Gents, especially you GARIF (with all due respect), to believe ANYTHING that comes out of the mouth of CRG after all these years, and all we have been through, makes me seriously wonder about your ability to judge people, especially white-color crooks, which is what this company is run by. This BS will continue until there is nothing left. Prepare for another R-split at some point soon. This stock and company has virtually no value to anyone or any other company; otherwise it would have been sold by now. It is folly to think otherwise. Dlog's point about the underwriters is spot on . . . I have never heard of any of them. As for CRG . . . he will NOT be fired.
Posted by G - 12 years ago
A couple of interesting (I think) observations...
Wasn't Needham the investment bank whose analyst just initiated the rating on VTSS at "buy" (is this "channel stuffing" by other means)?
I'm still sticking to my original assertions that acceleration of design wins and new product sales make the long-term case for VTSS.
They could need the additional capital to exploit these new markets and equity currently has the lowest cost of capital (lower still if you get your shares as part of your compensation). The dilution might be well worth the ROI (of course this has not happened before - note the after-hours beating).
No one understands the stock market.
Posted by phobos - 12 years ago
The Events&Presentations section reveals how we came about these friends.
Never have I claimed to be the guru of judgement! I often wonder why I became part of my only wedding...
The value of VeriTime and Intellisec are starting to show, keep in mind VeriT was born in mid 2012.
Posted by GARIF - 12 years ago
If nothing, GARIF and phobos, you guys are clearly the "cup is half full" types. I know BS when I smell it, and the stink coming off of VTSS is so bad, that the EPA should declare its corporate HQ a super fund site. Keep drinking the Kool Aid boys, maybe one day goats and chickens will mate and produce some sort of new creature that we can name VTSS. CRG and the BOD are probably having a nice dinner tonight at Ruth Chris steakhouse in the great state of Californication and laughing their asses off - again - about how they screwed us.
Posted by G - 12 years ago
Almost a year ago (June 19, 2013) VTSS issued new shares at $ 2.15/ share and raised $ 32.6 mil. Needham was used before as the principal as now and 2 new co-managers are being used in addition to retaining one from before. Certainly not Goldman Saks.
The same wording " Vitesse intends to use the net proceeds from the offering for working capital and general corporate purposes" is used again- I guess this is money to pay for the steak dinners.
There are other small tech companies that haven't shown a profit for years, that every year do the same issuing of new stock for working capital. Who buys it? People chasing a dream.
I'm just amazed Billy Martin sticks with these clowns. Of course he got a nice chunk of stock in last year's offering at $ 2.15- still way in the profit zone on those shares.
Posted by Techinvestor - 12 years ago
...and Mr. Martin, and his two board members are the canaries in the coal mine. So far, they still seem to think there is money to be made here. I think I will be watching the top line more closely than ever.
I can't get over the after hours beating. Will the drop continue, or will it bounce at the open?
Posted by phobos - 12 years ago | Updated 12 years ago
From April 2013 to this underwriting the price action is quite positive despite this current setback. Long term bagholder, usually just read these comments a few times a year, but there is plenty of negative feelings here. Perhaps THIS time is the time things will finally get better. If we can get another 60% gain in next 14 months we top $5. Anyone think this is a "buying opportunity" just like the last secondary was
Posted by sstockss99 - 12 years ago
This is only a "buying opportunity" if we see an uptick at the August cc. The investment community needs to see some top-line growth. Without top-line growth, someone is going to say "B*llsh*t!", if they haven't already. This company can't keep going back on its promises unless it wants to lose whatever is left of its credibility.
There needs to be some growth. Period.
Also, while I'm at it...
Let me just say, that the share price doesn't get hit for disappointing earnings -- it gets hit for lowered expectations. Those (what turned out to be high) expectations were set by management. If you can't deliver, shut your mouth for God's sake! Don't use the internal management "reach numbers" to release to the investment community. Manage the God-damned perception a little. It really looks as if management has not been honest (certainly not forthcoming), why should the investment community put its faith in vtss?! Under-promise and over-deliver, not the other way 'round!
How many years into his tenure is CRG going to keep making this rookie mistake?
...and there goes the share price - right down to the offering price of $3.35:
http://investor.vitesse.com/releasedetail.cfm?ReleaseID=854381
Posted by phobos - 12 years ago | Updated 12 years ago
Totally agree, growth is needed, Period!!
Posted by sstockss99 - 12 years ago
It is like these guys ARE trying to screw this up. How does it make sense to front-run your own entry into the R2000? Let the news hit that you are in, wait a bit and then you can raise more money. Could it be that they weren't "in"?
Hockey Stick? What a funny joke in hindsight. HS my ass - and that is where we all got this hockey stick. The only HS here concerns the number of shares - straight up.
I would like to think that the crooks have some master plan where everything works out in the end, but I doubt it. It just looks like pigs at a trough - the plan, "every last morsel" then go find another trough. I would seriously hate for people to think of me that way, but they just don't seem to care.
I had just been ready an article on the dangers for front-running the Russell. Some poor slob jumped in for 100k shares at the end yesterday and got clobbered. F*%#ing Crooks..
Wait a week and the stock would have been much higher - they would have gotten more money - but then I don't know how the kickbacks were worked out, do I?
Posted by Satbob - 12 years ago
as pissed as you get - -
understand that the # of shares issued is the same as the # of shares remaining in the $32.5MM Convert A due 10/31/2014.
so that is no dilution -- but a non-operating one time loss for buying back the debt at a discount.
if they are listed on the R2K (and they would know that by now) they took their medicine before the listing - - and will look much better on paper to new funds as they have not increased the total shares by more than the 1MM over-allotment.
and they will be adding to the free float by the 7.4 MM shares which allows funds in --as all other shares are tightly held- -volume should increase.
the two added bookrunners will also help --
i think this will help turn the story to the products - -and we will see revenues increase into 2015 with no real debts due until 2016 -and that is a small sum in comparison.
dW1 - -trade on!! or get pissed enuf to leave for good.
Posted by daWiley1 - 12 years ago
"understand that the # of shares issued is the same as the # of shares remaining in the $32.5MM Convert A due 10/31/2014.
so that is no dilution -- but a non-operating one time loss for buying back the debt at a discount."
If true, then that's good news, but the press release says:
"Vitesse intends to use the net proceeds from the offering for working capital and general corporate purposes."
This is not a false statement, but it is hardly enlightening either. I realize that the company does not owe me a finance lesson, but is there some reason they would like to have the share price plunge, if only temporarily?
...just trying to understand. Thanks for whatever light can be shed.
Posted by phobos - 12 years ago | Updated 12 years ago
if we are listed on the R2K - -we will have 60MM shares and no debt due til 2016 - -
and i expect $30MM in cash after debt pay off.
any revs and profits go to the shareholders - -
Posted by daWiley1 - 12 years ago
Interesting. It does make sense.
VTSS seems to have fooled the market too:
http://finance.yahoo.com/echarts?s=VTSS+Interactive#symbol=VTSS;range=1d
Is there some reason why VTSS is playing this so close to the vest that the only people who figured it out were those on VTSS' board and daWiley1?
Thank you for the insight.
Posted by phobos - 12 years ago | Updated 12 years ago
phobos -
i think the "market" would rather have us deal with the debt now -- rather than get listed on the R2k and then do this type of deal --that would really remind folks of our striped past - -
paying down debt is a "corporate purpose"
we will only have the Term A loan to Whitebox of $7.9MM and the Convert B to Whitebox for $9.34MM due in 2016
with about $30MM in cash and no debt due until 2016 and 60MM shares outstanding - -we have finally paved the runway and look very attractive to funds if and when we increase revenues.
VTSS paid fat andy's Whitebox a 7% fee to cash him out of the Convert A due in October - -i expect we will let the bond go to term or offer to cash them out at par with no fees paid in October --or earlier with interest to term.
if by chance the stock goes to over $4.5 by then - -VTSS might issue the shares and keep the cash - - that is their choice on conversion.
Posted by daWiley1 - 12 years ago
I understand what you're saying, but the plunge after hours and at the open and on significant volume suggests that the market thinks this is just garden variety wall street corporate hi-jinx. Why not explain the purpose of the offering to the shareholders beyond the very vague "corporate purpose"? Doesn't everything a company does have a corporate purpose?
I understand what you're saying and it does make sense, I'm just wondering 'why keep the shareholders in the dark'?
Would it have something to do with this:
http://www.sec.gov/Archives/edgar/data/880446/999999999714010987/filename1.pdf
Posted by phobos - 12 years ago | Updated 12 years ago
I just took a look at the October 2013 10K. The long term debt originally due in Oct. 2014 was renegotiated and is now not due until August 2016. The debt is $32.8 million of a convertible debenture and $9.3 million of a term loan, total of $42.1 million. VTSS is 2 years away from having to pay this off. So there is no immediate reason, at least not visible now, why they would need this money. On March 2014 VTSS had $48 million in cash. This is where this all becomes very telling. If VTSS were cash flow positive VTSS would have 2 years to build cash from the $48 million level so when the debt falls due mgt. would have enough cash to continue to run the business in a normal fashion. But with the company being cash negative Mgt needs more money. So the question is when do we go get it. Answer is sometime in the next 2 years when we think we have a favorable stock price. Conclusion: Mtg. thought the stock price was good right now. This tells you all you need to know about the great expected build out and revenue flow to come over the next 2 years. If mgt. really believed it why not wait til next summer and just convert the stock rather than dilute even further.
With the new board members there may be some desire to just pay this debt off and get rid of it so it is not an issue in the investment community. If that is the case here are the numbers. (I actually think this might be the scenario that is most likely. If it is we should see it play out before the end of summer.)
$48 million in cash now plus the new stock offering of $23.2 million = $71.2 million. Prepay the debt, lets call it $45 million. After paying the debt VTSS has about $25 million to run the biz, no debt no interest payment, and lets get going.
Posted by dlog - 12 years ago | Updated 12 years ago
Does anyone know what THIS is about:
http://www.sec.gov/Archives/edgar/data/880446/999999999714010987/filename1.pdf
Posted by phobos - 12 years ago
CRG and the gang certainly have never mastered UPOD and I wish CRG was just a rookie phobos- unfortunately he is a veteran who should retire. It will be interesting to see if Billy Martin and other big holders suck up this new "public" offering or will they stand aside for new blood this time.
I wish I could trust management to pay down debt in future with money and not squander it. Eventually they are going to have to grow the top-line- we're all in this to make money.
Posted by Techinvestor - 12 years ago
sorry to differ with your numbers dlog
>> I just took a look at the October 2013 10K. The long term debt originally due in Oct. 2014 was renegotiated and is now not due until August 2016. The debt is $32.8 million of a convertible debenture and $9.3 million of a term loan, total of $42.1 million. VTSS is 2 years away from having to pay this off. So there is no immediate reason, at least not visible now, why they would need this money. On March 2014 VTSS had $48 million in cash. This is where this all becomes very telling. >>
but VTSS has $32.8MM due this year on 10/31/2014. this is what i call Convert A. and it was originally $50MM but LInden Capital cashed out over $4.5 (around $8+) for shares and Whitebox got $14,715,049 for $13.7MM or 3 MM shares - -a 7% premium to exit early. so the debt stands at $32.8MM or about 7.4MM shares. this was done on 11/07/2013. the largest holder of this note is Raging Billy C. Martin's Raging Capital.
the remaining debt moved to 2016 is the Term Loan for $7.9MM and the Convert B for $9.34MM both now have pre-pay terms to be negotiated with Whitebox (Andrew Redleaf) for a fee.
the $48MM that you see in cash would pay down the current debt but leave the corp in a cash squeeze. this move allows for a pay out of debt and about $30-40MM in cash. $48 +23 - 32.8 and cash drain until break-even or positive cashflow.
dW1
Posted by daWiley1 - 12 years ago
Da Wiley:
You are right. I stand corrected. The $32 million debenture is due 10/31/14 and VTSS needed this deal to pay that down and sill have $$ to operate the biz.
Posted by dlog - 12 years ago
Satbob,
you were correct a few posts back when you stated that Vitesse would be tight on funds after the October 2014 debt was paid.
as pissed as we are,
thanks daWiley, for explaining the most recent offering, much appreciated and glad you are here
Posted by christ3opher - 12 years ago | Updated 12 years ago
My hope was granted, $3.35! meaning we dealt from strength.
Wiley's eloquence solves the riddle, bless your heart Wiley!!!
Posted by GARIF - 12 years ago
daWiley,
I have seen this before. I glad you think you know what's going on, but you are going to have to "show me". I can't believe any of that "blue sky" until VTSS says this money is to pay off the debt - otherwise, I think they will just use it up paying new employees can stock bonuses to themselves. Given this horrendous track record, I don't see how we can even think of giving them credit for anything except what they show us - "it's not what daWiley says, it's what VTSSS does". I'll believe it when I see it - otherwises, smells like the same of shit.......
Posted by Satbob - 12 years ago
Satbob, I don't know if you're old enough to remember the full service gas stations; Vitesse is is reverting to an old wonderful thing, SERVICE, SERVICE, which does require adding to our headcount, now we are also chasing NEW storage opportunities and perhaps others...
call me a simpleton but I believe they will use resources wisely.
Kevin E. Cassidy
Analyst, Stifel, Nicolaus & Co., Inc. Q
Y eah. Thanks for taking my question. On y our Internet of Things strategy , as y our hundreds of customers turns
into thousands of customers, what is the strategy for supporting them? It seemed like y our advantage y ou're
say ing right now is y ou're giving them direct support. How long can that continue or what's the longer -term
strategy ?
................................................................................................................................................................................................................................
Christopher R. Gardner
Chief Executive Officer & Director, Vitesse Semiconductor Corp. A
Y eah, that's a good question. We are looking at that very hard. So we do have a pretty broad-based both rep and
distribution channel. I think a big part of the difference is that what is a reasonable sized customer to us is way ,
way below the hurdle rate for one of our large competitors. So, I've probably visited 20, may be 50 of these
customers that can't even get through the [indiscernible] (28:45) being served by the large competitors.
So, it doesn't scale, as y ou're pointing out, to hundreds of millions of dollars. It will scale for the next 12 months or
so and we are looking pretty hard at our coverage model. But I think it's really just a matter of priority . Our big
friends are even not that excited about some of the big network in their companies, companies like Alcatel-Lucent
and Ericsson are Tier 2 accounts. So, a lot of these guy s, they 're off chasing Samsung cell phones or Steve Jobs,
right? So, a completely different viewpoint from their perspective.
..............
Posted by GARIF - 12 years ago
Garif,
I fully understand that they are adding headcount - that's what i mean. I don't buy the talking head points of daWiley that this is all going to result in paying off the debt and everything is going to be great - I just don't buy it. Sounds like one of the current Administration talking heads - everything is great - and its not!
I think this company is fully capable of pissing this money and a lot more away without any significant results. Chasing small accounts - I am in business and that is what I did when I didn't have enough business. I remember the day when the phone rang and I said, "Sorry, we aren't accepting any new accounts of that kind." Sure, big business doesn't want to waste the time and resources to service the small accounts. It just tells me where VTSS is - not only are they chasing these accounts with people and resources, but they are sitting there still waiting for the phone to ring with another and another small account. That's really how business is - it depends on where you are on the curve and VTSS isn't very well positioned. They are still chasing "scraps". JMO
Satbob
Posted by Satbob - 12 years ago
Someone awhile back said "VTSS is now a startup company, forget the past". I wish we could wipe the slate clean and IPO again.
It's amazing VTSS tries to use the right buzz words "we're in the cloud" & IoT, but doesn't really have a gameplan that translates to sales.
Hell, we're a $ 200 mil company- companies with one idea are valued in the billions (eg. Twitch- a guy playing video games.)
Posted by Techinvestor - 12 years ago
from Q4 2013, sounds like the old chaser is becoming the chased. In all seriousness I believe us to be facing a more focused/determined company then ever before, it's going to be ok friends, the worst is behind us.
Lets not forget the high margins IoT will bring us.
So, that's industrial and military switching and networking, but then y ou get to all kinds of smart grid metering,
y ou get into all sorts of piece of equipment now that are just having an Ethernet PHY or a very small Ethernet
switch. We won a design recently in a security gate for parking lots. I mean, who would imagine there'd be a n
Ethernet switch in there, but now there is.
And so, we're literally collecting hundreds or more customers in this space, guys we don't know y et that have been
coming to us over the last y ear. We've identified this as an area where we now have the wherewithal to go focus on.
And that was really the second reason we haven't play ed here as we didn't focus on being successful where we are.
We now feel we have a strong enough market position in the Carrier and Enterprise that we can take a few
resources incrementally and go focus on this market and see how fast we can grow it.
............................................
Posted by GARIF - 12 years ago
After hours positive news goes unnoticed, such is often the nature of good news. Had the stock traveled south after hours like voters in Florida, even dead people would have posted on such negative news...
Posted by GARIF - 12 years ago
Having thought it over...
There are two things I find objectionable about this whole June 12th surprise:
1. no explanation (someone from this board needed to explain it to the public) - it hearkens back to the debacle days where the powers that be just decided "we're not having any shareholders meetings - for years!" Really? This is supposed to inspire confidence in vtss as an investment? Maybe with BM on board, they just don't care about the retail investor. What about the pros who they are courting? Is the lack of communication a problem?
2. In the grand scheme of things, it makes no difference. Unless and until this hobby of CRG's can grow the top line, and convert design wins into dollars, it will remain nothing but a hobby. It would be nice if they could get rid of the debt and reduce (not INCREASE CRG) their financial leverage and cost of capital, but if you can't grow the top line, none of the rest matters.
I am still optimistic, but I will be watching, and the 'hubris meter' is inching upward.
Posted by phobos - 12 years ago
You should be a Wall Street Analyst phobos- I agree with your assessment- it appears to be a hobby and there is plenty of hubris on the part of BOD/CRG.
This is what happens when there is no accountability for not meeting your goals.
Posted by Techinvestor - 12 years ago
All is well my brothers! Wiley called it best, Vitesse killed two birds with 7.4 million shares; she added to her working funds and freed shares for the onslaught of funds FROM OUR JOINING THE RUSSELL.
Had the companies plan been to do it to us again, they would have issued millions more. Don't laugh but they have our well being in mind...
Posted by GARIF - 12 years ago
Interesting how the 7 plus million shares brought to market were omitted from this article.
http://finance.yahoo.com/news/weakness-seen-vitesse-semiconductor-vtss-112020476.html
Posted by GARIF - 12 years ago
Agree Garif, that article was amateur at best! Not to mention the secondary offering was bogus for sure.
Posted by sstockss99 - 12 years ago
In spite of it all, we made the preliminary additions list for the Russell 2000 -
Posted by Satbob - 12 years ago
Posted by 