Destiny Media Technologies (OTC BB: DSNY.OB) is going to be releasing its earnings tomorrow. The company's CFO, Fred Vandenberg, was kind enough to offer to speak with afterwords. I plan to call him after I've had a chance to read over the filing. If you have any questions you'd like me to ask him, feel free to leave them in the comment thread below.
Tuesday, October 13, 2009
Questions for the CFO of Destiny Media Technologies?
Destiny Media Technologies (OTC BB: DSNY.OB) is going to be releasing its earnings tomorrow. The company's CFO, Fred Vandenberg, was kind enough to offer to speak with afterwords. I plan to call him after I've had a chance to read over the filing. If you have any questions you'd like me to ask him, feel free to leave them in the comment thread below.
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A few questions...
-How is the cash position holding out? (a little premature not having seen the filing, I know)
-Is there any need to raise money via debt/conv/equity in the next 12-18 months? For an acquisition or for cap ex, or operations?
-With the current services being offered by the company, when can we expect to get a handle on what the quarterly revenue run rate will be?
-What are some corporate milestones that we should be looking for in the next 6-9 months?
-What is the likelihood of an adverse ruling with this legal business er: Yangaroo? How is the case proceeding?
David, I see you follow Edlheit's writeups on VIC very closely. I too own DSNY, HEMGF, and PNWIF. He is a sharp guy. I posted the questions for the DSNY CFO above too, I'm curious as to his response, I've been in the stock since February, so it has been an easy hold so far.
Edelheit's sharp, but he's young and can be overzealous at times. I own the same three of his picks, but the only one I've got a good vibe on right now is DSNY. Still holding the other two to see what happens.
Has the company abandoned (or, for all practical purposes abandoned) its marketing and sales of Clipstream. Months ago, the CEO said they had to focus on PlayMPE and could not devote the time and effort to Clipstream. Is there much, if any, future to that business opportunity?
Preliminary results out:
"Destiny believes it will achieve fourth quarter fiscal 2009 revenue between $860,000 and $875,000 representing an increase of 75% to 77% over the same quarter in the previous year (or 29% to 31% over the previous quarter). The company believes it will achieve EBITDA of between $275,000 and $290,000 for the quarter."
I too own DSNY and PNDMF, I believe DSNY has great prospects due to their contracts with some of the more prominents record labels. I love the fact, that DSNY was able to double its profit before taxes - which to me implies a great,great margin. this should help in building up the cash to fund its business operations without having to rely to heavely in debt. If DSNY is to issue new shares to fund its business, I certainly hope it is not at this price levels. I feel that Major Funds have being watching this stock and I really believe some will start buying the stock. I wouldn't be surprised to see this stock trading at 1-2+ due to the premium some will pay for DSNY's growht and potential. The reward/risk is great I think. (it kinds of reminds me of the reward/risk of EVC when it was trading below .20) (among others..)
As far as PNDMF goes, I also like how it has being growing its revenue, and the corporations that it has aligned itself with. It also seems that it is getting some good interest on the institutional side. Tilson Funds owns some PNDMF shares. Some time ago a lady at my local Sams Club told me that online printing had been on the rise. Customers are catching up to the PNMDF technology and see the great benefits - for example, coming to just pick up their pictures when it is convenient for them. I checked SFLY quote, it has a PE of 1,266!! ( I must admit that I haven't really checked their F/S to get an idea of why investors are paying such a high price for the earnings of the company..) Overall, I believe PNDMF has also great prospects and Management knows it. Hopefuly, Managment makes smart decisions, and due what is best for the company and its shareholders. One must just be patient but watchful, and continue doing homework. I believe that if the company continues delivering great results, Investors will begin to recognize that at current price the stock might be such a bargain. I wouldn't be surprised to see the stock trading in the 4's
Thanks.
Anon,
Whenever you are dealing with an electronically provided/distributed service, it ought to be high margin; that goes to the heart of the investment theses for DSNY and whatever PhotoChannel is called now.
As far as Tilson owning TCFKAP, that's not a selling point, in my opinion. I doubt any other fund managers or other institutional investors are eagerly reviewing Tilson's holdings for stock ideas. As with his friend Pabrai, Tilson is a much better salesman and entrepreneur than he is an investor. That he has been positioning himself as prescient on the housing collapse is a tribute to his public relations ability and the inability of reporters to ask the obvious question: how did investors in your mutual fund benefit from your prescience? The answer is, of course, that they didn't.
i'm sure you'd get the stock answer "we believe the lawsuit has no merit", but if there's any additional color you can glean from him on the YHOO lawsuit, it'd be great. for me that's the only real cloud hanging over this company, although the likelihood of any ruling coming any time soon is low. the median time from filing to trial is 24 months for that specific court (and patent cases are typically on the longer half of the data). With a May '09 filing date we're looking at a 2011 trial date. long time to have that hanging over the company, but also far enough away not to worry so much right now.
Jordan,
Please see this post from last April where the CFO addressed the Yangaroo dispute at length. I haven't been concerned about that dispute since reading his response, but I will follow up with him about the situation when I speak with him.
thanks david. just fyi, i'm pretty sure that this new US lawsuit in wisconsin was filed in May - after your last conversation with him on this. so it's probably worth revisiting. as expected YHOO did receive it's US patent in Apr/May, it filed suit against DSNY almost immediately, DSNY filed a motion to dismiss on 7/24 but that motion was denied on 8/31. i've got a copy of that ruling and it lays out YHOO's claims...doesn't read that well for DSNY, but i'm not a lawyer by any stretch. an immediate dismissal would have been great, but now it appears to be headed to a full trial. again, not super stressed about this, lawsuits are a part of business. but it is a cloud. happy to send you a copy of the dismissal ruling if you'd like it.
Sure, Jordan, e-mail it to me via the e-mail address listed on this blog. I'm not a lawyer either, but I'll take a look at the ruling before I call the CFO.
Practically no patent cases are going to be tossed on a motion to dismiss. Judges feel uncomfortable making such decision when it comes to technical based cases such as patent infringement cases. Besides, every inference must be drawn in favor of the non-movant in these circumstances. The biggest reason I am unconcerned about the lawsuit? Yangaroo's apparent imminent demise. They are losing money hand over fist, and I'd be shocked if they were a going concern in 6-9 months. Plus, how are they going to afford to pay the law firm when they are already losing tons of money. If I were DSNY's CEO, I'd want the case to drag out as long as possible, with the knowledge that my opponent cannot afford to continue to exist, never mind prosecute a marginal case.
agreed on your comments homer... the lawsuit certainly feels like the last act of a desperate company. that being said, last i checked (which was a while ago) YHOO had a decent bit of cash on hand on the books left over from their big fund raising. and that worries me a bit, that they've got some investors behind them that could continue with the lawsuit even if YHOO withers away. but again, a small cloud in an otherwise bluebird sky...
How do you figure they have a lot of cash? Their latest balance sheet (as of 6/30/09) shows a cash balance of $1.33M plus another .33M in receivables. They are burning through 0.7-0.8M in cash per quarter. They could be out of cash by year end.
FYI,
I just spoke with Fred Vandenberg, but before I post the notes of our conversation here, I wanted to run them by him via e-mail to make sure my summary of our conversation was accurate. I'll post after I hear back from him, which probably won't be today, given the time.
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