Should have been under the stock heading I think he is getting...

Should have been under the stock heading

I think he is getting to me

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Bonkers I did trade PCO a few times

But not lately and I think I will leave it alone
PCO is in a hard sector with low margins and sitting at the bottom of a long down trend

I do like Ian Huntley's quote “Better value elsewhere “

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Restructure And Beyond

Event
On 18 March we attended a meeting with Pracom management to discuss how its business restructuring process was progressing and how the restructure is likely to impact future earnings.

Impact
We have concerns about Pracom’s ability to sustain long-term retail distribution margins and the Technology division's uninspiring growth profile.

Consequently, we have revised our forecasts for FY02 and FY03 and now expect an adjusted FY02 loss (post goodwill) of $9.6M (unadjusted $66.7M) and a FY03 loss of $2.4M. This compares with our previous forecast of a FY02 loss of $3M and a FY03 profit of $2M. On this basis and with an increase to our risk free rate from 5.9% to 6.4% our valuation drops from $0.19 to $0.15.

Summary
The poor 1H02 result confirmed our concerns that PCO is struggling to grow revenues, resources are being misaligned and core costs had not been managed tightly enough. The result stirred the Pracom Board to take decisive action. The founder David Paranthoiene replaced the CEO and the business was restructured into two divisions with a focus on margin improvement and more effective allocation of resources.

Investment Opinion
The restructure is positive but PCO’s problem remains that it operates low margin businesses with moderate revenue growth profiles. Critical for short-term success is PCO's ability to leverage its call management expertise to capture new higher margin business.
In the long-term PCO's middleware product has potential to deliver margin expansion and drive earnings but it currently has very limited market traction. PCO’s earnings profile is likely to be quite volatile over the next couple of years.