Well.. its that time of year again and I'm working through statements.. guess which stock has to my discust made my lap again.
So for all you money making non-believing investors.. my alternative reality roundup is as follows.
1. No one has made mention of it but it was reported in an article I read on one of the tech sites that as well as selling off the precision product marketing line, R&D is also being sold off. What does that mean for whats left of Ag? Well as announced RH is heading back to the farmlands where he made his money selling sprayers and machinery. It looks to me like when the merger of Outback with CSI occured years ago RH was happy to see it go and live the good life. A tech company is not what he knows.. and is not what Hem or whatever it will be called in future will do. If he does need a trinket .. he'll have someone else do it.
2. The thing that occurs to me during this whole debacle is ... Agjunctions's rise to fame. It appears to be untouched and yet it has not contributed to the bottom line. As per last post I think its a dead duck. I don't like anything about the software business. I don't think its something RH or the company knows anything about. Even if connectivity is the be all.. Hem is a small player in the space. Again. I like trimble and deer for that. They dominate the market and can turn off access to who they like. I expect more silliness in this direction.
3. Related to 2, I don't like the whole steering side of the business. If the X or whatever its called was any good and sold. you can bet you wallet the company would have been crowing about it. I've been in this game a long time and companies never stay quiet when they have a product that is successful. Nope I think the whole steering business is a failure and will cost them alot more than they will ever make out of it. Related to the above I think you'll hear less about OEM's being interested as they creep away from this company. This company is not the type you'd ever trust your product line to.
So my pick is that the Ag business in future will be smaller than even the cuts suggest. I expect RH to continue to cut locations until he's happy with his Hiawatha profit margins. Nothing wrong with that. It makes sense and is what I would do if I were him (if I werent going to sell thelot). Expect him to fatten up his share coffers in the near future (award himself). I think investors will be screwed given the share volume and PE. Expect something like a reverse split or dilution.
Now to the Precision business.
1. RH is fundamentally right that these other businesses don't make real money. I think he's selling R&D because without it the marine and whatever businesses are worthless. Yeah they make sales but its the same old deal. It costs them too much to do it. So I personally think there may be some value in its R&D although its far too small a company to develop the feature list that the trimbles will invest in.
2. The best outcome for that group I think is to be sold to someone who needs the sales channels, and may invest to bring the R&D to world class standards either by adding people or merging into their own R&D teams. The exec, finance and marketing team can be fired, as can the same team in Ag. None have them have been successful in positioning the company to make money.
So in the end there is a equipment sales business available in the farmland.. but I'm with Benj.. sell the lot, take the cash and invest in something else.
Now if you'd only followed my suggestion you'd have made yourself 10% in bunge since Sept.
Fairwell... Uncle Corn