Tuesday, August 9, 2016

Strictly O/T: Largely Hapless Little Chicago "Software As A Service" Public Company Reports Q2 Results Tonight

Strictly speaking, this has nothing to do with the life sciences. So feel free to scroll on by.

But for the last five years or so, on and off -- mostly as an MBA-level business school style case study -- (along with an anonymous commenting co-hort) I've curated a chronicle of the reversals of fortune, and manifold mis-steps -- of a hapless Chicago company called Mattersight.

I don't think there's ever been a public software/consulting/tech company that retained (and repeatedly bonused) the same CEO over a 16 year period (and essentially the same board majority, over the same time period) -- all while switching cash draining business models at least three times, and never once making a penny of GAAP EPS from continuing operations. Not once in over 16 years. That goes back to the Y2K bug, and internet bubble no. 1. . . . And the stock has fallen from over $305.00 per share, to as low as $2.80 a share (bottom of the melt-down of 2008-2011), and sits at $3.80 per share today.

The reason I choose to mention it today, is that the company will report its Q2 2016 losses this evening after NASDAQ close. Last week, on what appears to be an emergency basis, it took out its old bank lender (likely due to a covenant default), and replaced it with a venture debt lender -- on terms that approach vulture lending.

So, tonight's call portends to be a watershed moment. I expect continuing and perhaps widening losses -- as the company spends about $1.50 for every dollar of sales it generates, at present. Last quarter, they parted ways with their CFO of nine months -- the third in four years, after only nine months on the job.

The company also admitted it could not reliably track how many copies of its flagship product/software are installed at customers, so it could not be sure it was being paid fairly, on a seat license basis. And still the same team awards itself equity and bonuses, for non-performance -- year after year.

So, like the mini-site on KaloBios, in the coming weeks -- I'll add an icon at left, so you may easily follow along -- if the above holds any interest. But I expect that MATR stock will keep falling into tomorrow, at a minimum. Now you know. Onward, for a relaxing walk in. . .

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