Member Info for BrokeNSmoke

i mean, i hate to say i told you so, but i thought it was going to be another meh update. jcj you have some valid points like blaming macro when the advertising industry has shown signs of recovery.

can we look at the facts for a min gents. the company is liquid, it has positive fcf, i.e it generates cash. not tons of cash, like 1.5% of its market cap. not amazing but it is good that it is liquid during such a difficult time. its not going bust. companies don’t go bust because of share price, it is just a **** investment not and currently not yielding and returns, and the market is pricing it as if it is going to continue to perform poorly in the future, not to mention the net debt and intangibles issue.

i'm still here because i think they have good model and think they will return to having a decent business model if they can transition from tech or tech comes back, but i don’t think the later is very likely.

separate issue - jcj, i thought you were getting out of s4 if the update was poor?

Rock - Its classic LSE2000, spout something about it going bankrupt, then never defends himself when challenged, returns the next day to post the same thing.

Personally, I say leave it as is. The money invested and the cash generated is petty cash in the grand scheme of it.

I suspect due to its nature, we wouldn't want it in S4C as if it doesn't work out the limited liability of the company comes into play and it can just be folded. If one of its technology investments did pay off then S4 would gain 50% of the success. I am assuming again here, but I suspect that the joint venture with Stanhope was for a little bit of risk mitigation but mostly for the additional expertise they could provide.

JCJ - Agreed, I am expecting a bit of a meh update until the tech spend is replaced with other clients. I personally will be watching the liquidity position as I think the FCF is one of the few positive things here at the moment.

LSE2000 - Give over with fear mongering will you. There have been plenty of offers for S4 in the past so why would it be foolish to try and acquire S4? Also business don't go bust because of a declining share price....

Full disclosure: I am no longer invested here, not since the bonus shenanigans earlier this year, however, google still shows me BOO related articles.

Today’s news is undeniably gloomy, however, having the CEO leave I think has to be at least a plus. It has been clear that his strategy hadn’t been working for years and seemed to boil down to keep sailing against the headwinds and ignore the rot in the hull.

One thing that kept me invested in BOO for so long, was the portfolio of brands and intellectual property that they own. I recall saying a year or 2 ago that the business model wasn’t worth anything, but the value of the IP is likely equal to that of the market cap. I can still see a future for BOO if they ditch the manufacturing in the UK manufacture cheap in Asia and just leverage their brands to differentiate themselves in the market.

Finally, I would surprised if we actually see the break-up of BOO and the brands sold off considering whom is your biggest shareholder. MA’s track record is often buying up distressed fashion brands to acquire the IP when they go under to feed his fully owned IP department store model.

I will probably be watching this to see who the bring in as new CEO and what the new strategy is. I still think there is value here and may reinvest, just not when trying to compete with Shein whilst manufacturing the UK.

GLA

Poker - Call me cynical but I am always suspicious when statistics are magically much better right before an election.

Any data nerds here know if there were any changes in calculation basis?

GoCPI - I tip my hat to you sir. I believe the job market would get worse and it would be a longer to our recovery quarter, however, providing this job data continues, I think you are right with a 2025 Q1 expectation.

JC - 100% agree.

Outside of another takeover rumour this stock has to momentum until at least the next TU. I am probably going to forget about S4 for a while.

GLA

I don't think its the CFO's fault if the expected sales forecasted isn't met. It is the responsibility of whomever is forecasting sales and expected market conditions. Not a task I envy given craziness of the past 2 years, but still, its part of what they are paid big bucks for.

'While they're at it second in command being a "Chief Growth Officer" needs looking at, obviously looks absurd when things aren't growing.'

Very true!!!

I'm not sure how we are all surprised at this low valuation. Having net debt in a higher interest rate environment and being a growth stock with shrinking in revenue with the added penalty of not having a reliable forecast in over a year. Not to mention all the downsizing right after paying over the odds for media monks - literally just burning money. Add to all that our competitors are showing recovery but we are still showing decay.

Its still probably worth more than £250m I agree, but the company really hasn't done much to justify it. Outside of the GM win, and the burger king win, its been all bad news recently.

GoCPI - Agreed, the amount of contacts and experience that man must have, not to mention the gravitas afforded to him from being a sir. Also its not he is stuck in his ways of doing things, considering the forward looking nature of S4. I do think having him in the business is an asset.

Not as optimistic about H1 2025 though sadly, personally, I think we will see a greater untick in US unemployment and a harsher 2025 than what is currently being portrayed. Time will tell.

'I remember thinking that too Broke and then out of the blue it comes and those scratching their tails are chasing it higher FOMO.

Here is is alway prudent to add the dips as the speculation rally 25% on a whim !

Having sold the 63/66p spike it makes it easier to add and trim.'

Mary - I too trimmed in the 60s (in tranches) and my current avg is about 50p .The update was worse than expected though and I cant believe they missed forecasts... again, however, I wouldn't be holding here if I wasn't still positive about the long-term. My whole post was to say that I don't think this is a coiled spring ready to explode in value as you stated. Personally, I think we deserve to be down at these levels based on the TU, at least for a while. If anything explodes this stock in the short-term then it will be another takeover rumour, but that cant be relied upon.

Auson - Agree, I think it was the GM win which was the reason the director bought in more. I think, if I recall, prior to the director buy, we went from mid-high 30s to mid-50s based on the takeover rumours. I just recall squabbling with Robina about it at the time.

JC - Agree. I have some sympathy with the forecasters as I myself set my company's group budgets and some of the sales forecasts are so steeped in uncertainty at the moment. That said, if we had a bad track record of missing, I would be damn well be airing on the side of prudence in setting the next forecast with the hopes to beat it.

They missed forecasted targets yet again, whats this, the 4th time now? Last year, it was H2 will be better, H2 comes, it is worse than expected, which is being repeated this year. I don't see this as coiling , more deflating as the slow puncturing on the wheel of the car that was tech sales slowly runs out of air.

If it goes down to mid-high 30s then I may average, but outside of another acquisition rumour, I cant see this jumping anytime soon.

An interesting debate going on here today.

'How much would any predator bidder pay for performance that has yet to be achieved , or for book valuations before a proper assessment of them ???'

Acquisitions aren't just made for performance though they can also be for expanding competencies, inorganic market share expansion, specific assets and intellectual property, good old buying customer books, vertical acquisitions, etc.

I tend to agree with your point here in some ways. It is hard to expect a premium for the business if the business isn't performing. At the same time, I could see interest parties for S4 for the AI competencies and/or the additional revenue.

'.... and during periods of high interest rates,inflation, and GDP stagnancy ( US using debt to prop up the economy) ...the market interest in leaving cash stuck in riskier non-div paying small cap companies...is low ( better returns elsewhere)'

Agreed for most of the market, switches to value stocks and treasury bills, but, there is also a class of vulture capitalist that likes to operating during these times.

I recall having this disagreement 2 years ago on here, when it was 'when tech spending comes back', that the big players are all going inhouse. I mean if your core competency is software, data and analytics and your biggest revenue stream is advertising why ever would you not build that inhouse. I said during 2022 the shareholders at these companies have seen the returns made from high advertising income and lack of advertising spend, why ever would they change that unless forced too. As JCJ likes to say, its has been a continual jam tomorrow argument on this front.

GoCPI - I hope you are right and it does come back in 2025, but I doubt it.

I don't remember if it was last update or the one before re Bugger King which I was happy to see diversification away from tech, so the GM is promising and further diversification step which I am happy about.

On a side note - which ever of you said it was a news leak seems to have been correct :(

Glow - I don't agree here. I suspect the big tech clients will, but I suspect for most other clients it will be cheaper, easier and less risky to just outsource this to an agency.

The valuation is cheap, but the revenue miss when competitors have posted improvements is concerning IMO.

Very poor update given the decent results from WPP and M&C Saatchi, which means the problem is now with us and not the industry. Surely SMS cant just cite macro pressures now.

Go CPI - I take your point but S4 started dropping the day the weakening US employment data came out hence my point re macro. Interesting to see retail data hasn't had any effect here, probably waiting for rates and TU news. At least we have some good potential catalysts should tomorrow and the day after be positive.

'Market at all time highs' - true, but I would argue that a good chunk of that is due to the magnificent 7 and their large proportionate weighting upon the S&P.

Well there should of been a good reason for the artificial climb to 66p? If we can identify that then it might yield insights into why it dropped back down to mid-40s. Personally, I think it was part macro, part decent results from WPP and part the rumours around a buyout that jumped the stock. Since then the US outlook has deteriorated and the buyout articles were just noise.

I'm not a fan of charts, but methinks they are less reliable pre-TU? The lack of a profit warning should be a positive sign at least....

Wow, you guys have way more in this than me.

17,833 shares at £0.5314 avg