So around 12 months ago I bought NextDC shares. Why did I buy them and why have I held them since? Well I thought I was on a winner when I listened to CEO Craig Scroggie’s comments in Media, Earnings Call Transcripts, Online Interviews etc. Well 12 months on I wish I’d never listened to the CEO or bought this stock. Is this a great company with good CEO? Yes and Yes. However my issue is with the CEO providing information to Investors via Media and Earnings Calls etc and making statements that have not been delivered upon.Let’s go back to the Half-Year results Aug 2020 Earning Calls statements by theCEO and see what was commented on and see what the results have been:
1. “Thefoundations we have put in place over many years will see the company continueto scale rapidly through FY '21 and beyond.”
Result: Well thecompany has not scaled rapidly. The company has announced 1MW of sales in 12months.
2. On International expansion “So a little bit more on that in thenot-too-distant future. But Paul, our plans haven't changed. We still desire towant to see the company grow and take advantage of the platform that we'vebuilt. And we think that we can do that across the region”.12 months on and still no announcements. Be nice to know whatthe CEO’s definition of “in the not to distant future?” is because notto distant doesn’t seem to be less than 12 months!!
3. “I wouldanticipate that the balance of S2's capacity will soon be gone”.Well, 12 months on still and only 1MWannounced so no S2’s capacity will not soon!
4. Here’s myfavourite comment of non-delivery 12 months on. “So FY '20 was big, FY '21will be even bigger because of the record sales here in '20. And I would expectthat this, again, could be a record sales year. We certainly have enoughoptions contracted. Just in options alone, just the conversion of optionsalone, and obviously the planning work that we're doing with customers withmultiples of megawatts, both at S3 and at M3. So I'm reasonably confident that,given the backdrop, the demand we're seeing, migration for enterprise andgovernment colocation and then the combination of the network density drivingmore cloud, both public and private, and a combination of all of those factorscould see FY '21, again, our biggest sales year ever.”. My comment to this is only the fact that 1 x measly MW hasbeen announced since!! Unless factually you believe it will be bigger year,then don’t say so!!!!
5. “But we are ina position now with the 3s, S3, M3; and the 4s, we're already planning for whatS4 and M4 will look like and the size and scale of those……..But we will do itin a disciplined way. And I think, again, we'll share a little bit more on thatover the course of '21.” Well 2021 has pastnow, I haven’t heard anything on M4 or S4, has anyone else?
6. “FY '20 was awonderful year, but FY '21 is going to be something extraordinary.” Ah, no it hasn’t been , it has been very ordinary at 1MW ofannounced sales!!
And what about the CEO’s comments in the Media? Here’s an examplefrom Aug 2020 in the AFR:
"There's no question 2021 willbe nothing like anything we've ever seen before. Not only is it our biggestyear ever for construction and development, but we have the largest number ofoptions under contract that we've ever had," he said.Well he is correct, 1 MW announced in 2020/21 FY is nothinglike we’ve ever seen before, just the wrong end of nothing we’ve ever seenbefore!!
And then there is the Earning Call Feb 2021 comments such as:
“And we've got plenty more to comeourselves. I would expect that as we start to make further announcements, we'reobviously very, very close to announcing the total size and scale of theopportunity at M3. As we're now well advanced into the base building developmentof S3, we'll be revealing more about S4 in the not-so-distant future as well.”Well again almost 6 months on and no furtherannouncements on M3 scale or size and nothing on S4? What a surprise!
And then thecomment “So as far as we're concerned,strong performance and leaning into a very strong second half for us. And theanswer to that is the last question now before I tackle the supply environmentquestion and that was in the second half. Yes, we've already exceeded our firsthalf sales -- already totally exceeded our first half sales by a number ofmultiples in the second half and have a number of large commitments that we'reworking through with customers. So again, very strong environment.”.Well, if theyexceeded first half sales by a number of multiples why haven’t we heard aboutit or any news for that matter?
As forInternational expansion, comments like these don’t give me a lot of confidence “So look, we'll continue to focus on international as anopportunity. And I just have to look at that and say, if it takes us 10 yearsto build a successful business internationally, taking 10 years to build awonderful successful business domestically, we'll just have to be patient andlook for the opportunity”. In otherwords, we were too slow once again and missed the boat from being too risk adverseand sorry Investors for being Patient and Disciplined and not progressing whatwe announced many years ago would happen in the not too distant future!
And finally,“There are many, many newopportunities, obviously, emerging as we go from M2 into M3 and obviously, S3into new developments we'll be sharing more about like S4. But it's a greatenvironment coming into a very strong second half”. Strong second half, HA, we’ll see I guess end of Aug but notholding my breath and expect I’ll be out of this stock by then to move on to astock that is not so Patient, Disciplined and doesn’t lead it’s Investors onabout what the not too distant future holds – whenever that is!
(20min delay)