I have been a COO holder for some time and like most had just about given up on it. Nonetheless, given some of the healthy debate on this forum and the < cash value share price, I’ve spent some time updating my views.
There are a few key factors that give me comfort that this company is worth a lot more than its cash backing. First, there were a lot of good mgt hired by COO over the last 18 months and their efforts would only now be beginning to bear fruit. Secondly, and probably most importantly, the new product line-up looks really good (see link):
There are obviously execution issues with getting this working for customers, but it’s not a bad place to start. Also, the shift to a customer service focus should not be underestimated as this was clearly lacking in prior years. The company also remains profitable, so should be able to fund most of the new product investment from internally generated cash flow.
This is not to say that industry consolidation does not continue to pose material risk, but the IP of COO’s new product suite is worth a lot to a competitor, as is their existing customer base - so given you are buying the company today at about cash value, there is a lot of upside. From here I think there are 2 likely options, 1) the company makes traction with its new product suite and the upside is significant (and we should know this over the next 6-12 mths or 2) the product quite take-up is low/execution is poor and Bill Patterson decides to sell out to a competitor. While the major shareholder does run this like a private company, I still believe he ultimately wants to maximise his investment.
Finally, this company has highlighted that it is under strategic review so this puts a number of value creating options (sale of ecommerce biz, sale of whole biz etc) on the table. This is one company where the more I look the more I see risks weighted to the upside at the current share price.
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