The reason that PSN stock will drift lower and lower has little  to do with a  quote...bad quarter-

 

All companies have bad quarters and survive- its because the quarter revealed a serious accounting problem and that will not go away.

 

As I have said to many times- accounts receivable are about 85-  90% of sales year to date- meaning almost no cash is being collected.

One of the most  probable reasons for this situation is that PSN could easily have pre  booked revenue and thus IBITDA in advance, in the first and second quarters-  and in that case cash is not due till a later date as rent.. This means they set up future rentals and take them into income when they sign the contract, not over time. In turn,  future quarters without growth in new contracts will have little gross revenue as rentals were pre booked in financials in prior quarters and sit in receivables.

 

If most of the income and IBITDA has already been booked- and if there are no new contracts in the  fourth quarter- then we are almost certainly looking at a loss in the next quarter- further, the year end audit could easily result in more bad debts increasing the loss.

 

so

If this were just a bad quarter- I would be buying PSN- I really don't know if they are setting up rentals  in advance- this is pure speculation on my part-I could be dead wrong and its just very poor collection policy--- its something every  analyst should have asked the company a long time ago- its very unclear from their accounting note.  But it answers the question- how could the receivables be so out of whack.

 

This is the issue that needs to be cleared up-- Until there is more clarification on this accounting issue- the stock will drift downwards- its not the results of the last quarter that is so bad- its what it revealed.