Comments
Unfortunately we had a not so pleasant experience with comments which led us to start moderating them. A mistake in the process caused all comments to be completely detered all together.
We apologize for this and to the author of anynomous posting on OVEN who fortunately has accepted our offer please send me an email: kaveh_tehrani at hotmail.com.
Once again I apologize if your comments did not appear on this blog in the past week, they should be there now.
posted by Kaveh at
4/07/2006 11:22:00 AM
1 Comments:
I have enjoyed your comments on here about the OVEN. From all sides. Let me confess what I know, nothing. I am just a rookie investor that thought I might get lucky with an emerging technology stock. Instead, I got burned bad. I wish I had found your site in October and listened to any caution on this stock. Having said that, I have become a fanatic at trying to find at all I can and everything I can about this company, product, and stock. I have been on a mission to determine if I have any chance of recovery sticking with it vs. licking my wounds and moving on.
I am not a technical type. I love what you guys can do with charts, graphs, indices, and stats. I love the games you guys play and I respect it. I have listened and tried to teach myself as much as I can technically, but most of my info is on the fundamental side I guess. I have talked to company execs, asked questions at the conference calls, and met and discussed the company with a former executive officer.
The only thing I have to offer on this post is just some background which Kevah was apparantely uncertain about.
This is clearly a highly speculative play. It all hinges on whether an industry and individuals enjoy and adopt a new technology for cooking food similar to what the "radar range" (first name used for the microwave oven) offered when Amana first offered it in whatever year that was.
To help out Kevah with background history, the facts are these.
The concept has been around and developed for about 10 years. Most of the time, in the hands of the inventor that did not know what to do other than to promote stock and sell future expectations that never materialized. Maytag agreed to market the product in North America beginning in 1999, and then sat on it and did nothing. Maytag gave back those rights voluntarily and Turbo sued them for not ever trying to promote it. An arbitration panel just recently concluded that neither side owed either party any money.
The inventor continued to falter, without a good business plan for a good product. Subway began testing the product as early as maybe 2001 or earlier. Initially in Puerto Rico.
By 2003, Subway wants to go forward, but the company is on the verge of bankruptcy. The stock is less than $1 and is delisted from the NASDAC.
At the same time, Perlman is completing his huge (for him) homerun by selling Practice Works (dental office software system) to Eastman Kodak, making Perlman, Jim Price, and Al Cochran all millionaires and Perlman a multi-millionaire.
Perlman is now old enough to retire (57). Price is still young (43ish). Cochran is early 50's. They claim that someone brought them the Turbo idea and it was just too good to pass up, and Perlman agreed to saved it instead of letting it go under.
Perlman puts up over 20 million to clean up the debt, and allow the manufacturing to take place for Subway. This deal is done in October 2003. The Subway deal is officially announced in March 2004, and the Subway rollout is finished first quarter 2005.
SBUX announced interest also in December 2004.
The negative stock split 3 for 1 happens sometime in 2004, not certain when.
While riding the crest of success, Perlman and crew (Perlman is Chair, Price CEO and President, Cochran CFO) announce a secondary offering of 2.9 million new shares and 2 million of insider shares. The sale happens in Feb 2005 at 20.50 per share after the stock had peaked at about 26 in December of 2004.
With the secondary, Perlman has all of his investment back out of the company. He and his amigos still have tons of stock, but no investment. The company is at that point 51% insider owned, 46.5% institution owned. Many of the institutions are now in at an average cost of 16-20 per share.
I cannot say for sure why the stock tanks so badly in the late spring of 2005. I have never heard a good reason for this. Also, for some unexplained reason, perhaps it is the stock price fall, perhaps it is his ego, Perlman begins to brag about more upcoming major deals like Subway and SBUX.
I don't know if he was naive, stupid, or intentionally trying to fraudulently influence the equity market. Who knows. But he talks up deals proclaiming that he "has confidence that they will be announced by the end of the year." He announces this on Cramer in June. The stock shoots up and stay up through August, at least stays up above 15. Note, there are several insider moves of shares on or about August 9, 2005. I have not been able to completely understand the relevance of those moves yet.
Anyway, Perlman continues to brag about and proclaim the upcoming sales at all the conference calls and at an investor conference in November at the company sales headquarters in Dallas, TX. (Corporate office is in Perlman's hometown of Atlanta now, but sales and distribution remained in Dallas after his takeover.) Then the end of the year comes without comment from Perlman or explanation or apology.
End of year earnings are not reported until March 6, 2006. By then there have been wide spread rumors. Cramer mentions a possible deal with Dunkin in his Closing Bell segment on CNBC. This was at 3:30 on 1/31/06. The stock went from 15 to 15.98 then back to 15.30 in the last fifteen minutes of trading.
I call and speak to Cramer in the 2/28/06 lightning round. He goes somewhat negtive, says he thinks Turbo may be "no hat and no cattle" and says dont buy. He says at 13 he thinks that its possible neither the longs nor the shorts will make any money.
The comment sets off more decline after 25 days of decline folllowing the tease by Cramer about Dunkin without any substantiation. The stock limps into the March 6 report and conference call. At the CC, Perlman admits he made an error in ever having commented on future prospects for sales. He says strict non-disclosure agreements with prospective customers make it unlikely that Turbo will ever be allowed to comment about future commercial sales. You will just have to read about them in the revenue reports.
Nice reversal after he had already promised the market about 5 times that he would be reporting the sales any day now. Fourth quarter sales did not hit targets and the stock takes a huge two day hit.
That brings us almost up to date. Since March 6, Turbo was invited to make a big splash at the DD convention in Vegas two weeks ago. Neither company has announced any future plans to move forward. SBUX continues to use Turbo in trial maarkets that have expanded from 100 stores to 250 and 600 by fiscal year end, October.
One 540 store chain, Wawa, has selected a competitor's product, the Merrychef oven.
Kwik Trip, a 200 store chain out of Minn and Wisc selected Turbo.
HMS HOst signed a master sales agreement, but no details as to what level of purchases they may make.
The long anticipated attempt to crack into the residential market will begin on April 23, 2006 with a presentation at the KBIS convention in Chicago. Turbo is trying to capture a share of just the very highest end of the market to begin with. They have hired the right people to hit that market, Martha Stewart PR firm, some world renowned marketing guru (segment on Sixty Minutes II, an 8 minute clip of the show is on the Turbo website), and others. But as we all know from the deLorean and other products, attempting to capture a share of the market of the rich and famous is often hit or miss, all or nothing.
The residential side could be destined to never be profitable as either a high end product or as a middle range product. Who knows. But that is the game plan, and that is what you are betting on with this stock.
My game plan is this. I figure Perlman wants to get in, get richer, and get out. You can argue that he has done this and the play is over. On the other hand, he convinced a lot of people to have faith in him at 20 per share. Goldman Sachs, and a whole host of others have bitten off a big chunk on this idea. I figure Perlman will do all in his power to keep his buddies happy by trying like heck to get the stock worth 25-30 agian, and sell out to private capital, or to Maytag, Sears, or someone that other products to go along with it.
From what I have read and heard from chefs and people that have used the product, there is no reason to believe that all of north america will not be cooking much faster than we currently cook in the not too distant future. And all the increase in speed will come without giving up flavor. If that is true, why would the technology not catch on? And if it does catch on, to what extent is Turbo's tech proprietary enough to be the biggest or only beneficiary? Not sure on that one. Clearly Enodis with its Merrychef product is a concern. No one has ever informed me as to how the two differ in technology.
If I can be of any more help, ask a question.
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Anonymous, at 12:55 PM, April 10, 2006
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