I did do a little more research on RIMG. They just made a significant acquistion, buying a firm called Qumu. The total cost was about $50m. That is for a firm with about $15m in annual revenues and they were silent about profit. That seems really expensive to me. I always worry when the purchase price is a function of revenues rather than EBIDTA. So I will be taking a pass on them.
I will still be selling AXS, and will put some $ into FCX and RTN. But I will keep some powder dry as I consider the next big thing to buy.
I was part of an offer to buy part of a company that was based on revenue and the accountant for one of the sides of the deal said it is common for the purchase price to be 3-5 times revenue. I too struggled with not using profit but there were a number of reasons given way to involved to go into detail here. Bottom line, I would not be as concerned about it. I just find it shocking that after a 2 minute look at the Yahoo numbers, RIMG is a $12 stock, making a profit with $11 a share cash on hand, no debt and a significant dividend.
ReplyDeleteWhat am I missing?
Good question. They no longer have that much in cash as they spent about $50m buying the smaller company in Nov. But they still have about $6 a share in cash.
ReplyDeleteI figured that cash number might be pre purchase. Did not have the time to research it any further. Hoping to do so soon at some point. Thanks.
ReplyDelete