Best Buy is not BUD's biggest customer, as DM is on record stating Amazon is the biggest, by far.
This is a desperate attempt to stop holders from dumping the stock after this announcement. The results are worse than I expected, and I didn't expect much.
12 months ago Dave was talking about being unable to meet demand, so he "restructured" the debt (bringing on an as yet unresolved legal case in the process) to bring on a second manufacturer and proclaiming the capacity to increase production 5x, implying demand was there. At that time the excuse was the exclusivity and control Eastfields were exerting, on apparently non-commercial terms.
Since then, despite the developed world going crazy on home improvement and gadget spending, BUD's sales have gone backwards materially. Yet, DM and RB continue to find other people to blame and other increasing implausible excuses.
Now, shareholders aren't looking at increasing production as it has been wound back over the last three quarters. Instead, despite reduced production DM is still talking about "oversized inventory" and a new, concerning term "aged inventory" and "margins are expected to lower".
How do you rationally expect BUD to survive the next 3-6 months? The only debt available to be drawn down are the loans from shareholders, which is confirmed in the 4C by excluding the amount available under the PFG LOC. Guess what that means? As the inventory continues to reduce, so does capital repayment on the PFG loan. This means all of the "margin" will continue to be paid directly to PFG, leaving nothing to restock the cupboard.
You could hope for someone to come in and but LIFX, but you cannot be deluded to think it is worth as much as BUD paid for it. BUD overpaid on larger revenues, which were growing (apparently at 40% yoy). Now revenues have shrunk two years in a row. LIFX would be lucky to be valued at $20m.
To me (and I'm sure many others) it looks like BUD will need another cap raise, possibly within the current quarter, as they will be heading into the loss zone. The question is, who will continue to prop up this pathetically run enterprise?
BUD Price at posting:
1.2¢ Sentiment: Sell Disclosure: Not Held
