Whenever a new CFO takes on a new role, one of the first tasks they undertake is to bring to account any weaknesses in the published financial statements. That is of course unless they meet resistance form a bullish BOARD.
If they are smart they will go through everything with a fine tooth comb and challenge previous assumptions, provisions, valuations etc etc.
Why? - Because they want the Books to be brought back to a point of Confidence and more importantly VOID of any further exposure or write downs.
Bryce Houghton was appointed less than two weeks ago. He has taken on this job after the market has totally written SGH off. So he is presented with an absolute free kick to reset the books.
The market has basically priced in that SGH is not going to make a decent profit, is going to struggle to finance its debt, is going to have revenues hammered, has paid too much for Quindell etc etc etc.
So if that's what the market has priced in - THEN RESET AND GIVE THE MARKET A REASON TO BELIEVE YOU
If I were Bryce I would be developing a solid reason for writing down Goodwill, giving management an excuse to pay down more debt and reign in costs etc etc.
He gets a chance to refocus the Board on their task at hand. CORRECT THE BALANCE SHEET, IMPROVE THE BALANCE SHEET, IMPROVE THEIR PROFITABILITY.
The market is not going to accept any further mistakes by the Management Team and the company is in desperate need of some credibility.
I for one hope Bryce Houghton can crack the whip and produce some numbers and guidance that are BELIEVABLE.
This is not a quick fix - BUT I believe it is repairable.
Until then I am grateful for the ridiculous trading opportunities this presents.
Good luck
SGH Price at posting:
92.8¢ Sentiment: Hold Disclosure: Held
