I'm a top 20 shareholder and know the company well as well.
The hedging is primarily to reduce earnings volatility not as a money making punt. They have been on the wrong side with their hedging in the past. That said they have hedging protection out another 18 months and at some stage the dollar will likely fall back to average, they may end up looking like geniuses!
What this does is provide time to work through the current transition stage from disc to web distribution and dramatically reduce costs. They also have the option of a small subscription increase with a large bottom line effect but likely will not come in until they improve the service ie web distribution and could therefore get a double wammy of reduced cost and increased sub fees.
They have 58,000 subscribers now (highest ever) and expect SSM subs to double in the next 12 months and EPC to stabalise/modest growth plus their blue sky potential microcat market product in about 12 months will start making an impact.
Obviously there has been a margin impact over the last 5 years with car makers thinking they can do this business just as well until they realise it is not core busness and they can't....these things are cyclical and the EPC's now have to talk to all the other aplications like SSM etc they are no longer standalone product and too complex for car companies to do their own.
I listened to a very recent interview with the Exec Chairman and founder with 35% skin in the game...he rated the company 9 out of 10 to get back to $70m revenue and $20m npat within 3-5 years. A strong company not going to go broke (no debt) and has a massive subscriber position with a mission critical product...can't sell cars without it.
IFM Price at posting:
25.0¢ Sentiment: LT Buy Disclosure: Held
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