3SOF

I must say I was expecting a bit more of a positive reaction, given today's news. But many times micro caps work in slow motion, because not many people are watching them or the news out.

We've had two distinct press releases for CIMT today, which seems like a response from management to the share price decline. I bet the two holders of 64% of the shares didn't like the way things were going

My take is a lot of the decline from $2.9 to a low of $1.66 was due to management not disclosing the  full information on the press release announcing the Microsystem's acquisition. A lot of people thought Microsystem was losing money and was in terrible financial shape. However, this isn't the case, or else CIMT could have passed the option it had to buy another 23.5% stake in the company. CIMT reaffirmed that Microsystems is profitable and probably to remain profitable:

• Cimatron Completes The Increase of its Holding in Microsystem to 51%
PR Newswire (Thu 3:01am)

«Commenting on the closing, Danny Haran, President and Chief Executive Officer of Cimatron, said, "We are pleased to complete the increase of our holding in Microsystem to 51%, as we believe it would increase not only our revenues, but our profitability as well.»

Another part I enjoyed in this press release was:

«As we had previously announced, Cimatron's growth strategy is based on internal growth, as well as on mergers and acquisitions. We intend to keep looking for M&A opportunities in order to further enhance our product offering and distribution network.

Cimatron's strong financial position enables us to finance the Microsystem deal from internal resources and to further develop our growth. We believe that being a larger company will open new opportunities to Cimatron in the CAD/CAM industry."»

CIMT's management is committed to growth. I would say the 20% revenue CAGR expected in my valuation model is almost "in the pocket", since Microstrategy alone will make CIMT's revenues rise by 49% (CIMT had revenue of $21.5 M in 2006 and Microstrategy $10.5 M, so in fiscal 2008, not considering growth potential, revenue will be $32 M)

There can be a bit of dilution because there's an employee incentive plan, but not more than 2% a year.

The issue is and will continue to be net profit margin. Can CIMT remain profitable, and more, can it expand its net profit margin to 15%, as expected in my valuation model?

I believe it can because it is a software company. Software costs a lot to develop, but once it is done, an additional copy costs less than $1. I expect R&D costs and SG&A expenses to decline as a percentage of sales going forward.

Another positive piece of news today had to do with litigation risk:

• Cimatron Reports Decision in Omega Arbitration
PR Newswire (Thu 3:02am)

In the 20-F filed with the SEC a few days ago we could read:

«We may not be successful in our arbitration proceedings with Omega.

        In April 2004, Omega – Adem Technologies Ltd., an Israeli privately held company engaged in the development of software, filed a lawsuit against us, claiming that we caused four employees of the plaintiff located in Russia to terminate their employment with the plaintiff and join us. In September 2004, Omega submitted a statement of claim to an arbitrator for an amount of $20,000,000 for damages caused to it due to the employment of the four employees in question. The arbitration process is now in its final stage. We believe that there is no merit to the claim, which we have continuously vigorously opposed, but we have nevertheless accrued in the fourth quarter of 2005 a sum of $250,000 for this claim. We cannot give any assurance that we will be victorious or that the arbitration award will not exceed the amount we accrued. See "Item 8 – Financial Information – Legal Proceedings" for more information regarding this claim. »

Those $20 M in claims could really cripple CIMT. Fortunately the arbitrator decided to settle the issue with CIMT paying just $145 K. CIMT says its expenses with the matter were roughly $250 K, which had already been expensed in 2005 financial results, so, no more impact from this. This risk won't be present in the next 20-F form.

I'll continue holding CIMT.

David, this is from that basher on yahoo, what's your opinion on this? Tia!

CIMT will wind up paying .25 on a revenue dollar for Microsystem SRL. Microsytem SRL was profitable according to Haran.

CIMT in 2006 was breakeven, not profitable from a operational profit. All of their profit last year came on exchange rate gains and interest income. Go look at the financials.

CIMT annual sales have been going down for the last 5 years. Haran only acquired Microsystem SRL to keep it from going bankrupt and out of business.

QuoteCIMT will wind up paying .25 on a revenue dollar for Microsystem SRL. Microsytem SRL was profitable according to Haran.

Microsystem is a distributor, a middle man, not a software company. That's why the revenue multiple is so low. Microsystem net profit margin probably is in the 1 to 5% range and there isn't much room for expansion there, like it happens with any distributor.

Moreover CIMT had these options to buy stakes in Microsystem's since 2005, when the company was in trouble (it appears). So the price fixed back then may have nothing to do with today's fundamentals or prospects.

QuoteCIMT in 2006 was breakeven, not profitable from a operational profit. All of their profit last year came on exchange rate gains and interest income. Go look at the financials.

So? Over the last two quarters CIMT had operating income of $479 K and net income of $738 K. The euro continues to be high against the USD and the company's cash will continue to earn interest.

QuoteCIMT annual sales have been going down for the last 5 years.

Revenues remained more or less flat for several years. In 2006 revenue was $21.459 M versus $20.925 M in 2005. So to say that "annual sales have been going down for the last 5 years" is wrong.

QuoteHaran only acquired Microsystem SRL to keep it from going bankrupt and out of business.

That's ridiculous. Probably when they made the contracts and established those options to buy stakes of Microstrategy, the company was going through serious problems and maybe facing bankrupcty. And the price was fixed back then. Now CIMT exercised the option to buy probably because Microsystem was able to turnaround its business (of course, with CIMT's help, but that's the past now), or else why would CIMT buy the company? Unless Microstrategy belongs to Koonras or DBSI, the major owners of CIMT. I'll have to investigate that later, but I don't think this is the case.

Moreover the CEO already said Microstrategy is profitable.

Ooops, already two updates for CIMT today ... I really hope CIMT gives a very, very handsome profit to the Main a couple of years down the road, because it sure is giving a lot of work

Quote from: Se7en on July 05, 2007, 05:25:10 PM
David, this is from that basher on yahoo, what's your opinion on this? Tia!

CIMT will wind up paying .25 on a revenue dollar for Microsystem SRL. Microsytem SRL was profitable according to Haran.

CIMT in 2006 was breakeven, not profitable from a operational profit. All of their profit last year came on exchange rate gains and interest income. Go look at the financials.

CIMT annual sales have been going down for the last 5 years. Haran only acquired Microsystem SRL to keep it from going bankrupt and out of business.

I figured out today that this is a smart basher who tries to make it sound like he is citing fact, saying he worked in the industry for 30 years, etc.  He actually has done some research on the stock so can cite a lot of information.

But today he used a really cheap scare tactic before the open.  He said the bid was at 0.01 and that CIMT was going bankrupt.  Total BS.  Sure, the bid was at 0.01, it was before the damn open.  The ask was at 2.35 at the same time but he didnt mention that, just tried to use the 0.01 bid to scare someone into thinking that CIMT was going bankrupt.  Really cheap tactics, but its working on some people, that 1.66 yesterday seemed like a market order with someone wanting to get out of a large position, cause it recovered in about 2 minutes. 

Quote from: tokyopua on July 05, 2007, 11:50:06 PM

Quote from: Se7en on July 05, 2007, 05:25:10 PM
David, this is from that basher on yahoo, what's your opinion on this? Tia!

CIMT will wind up paying .25 on a revenue dollar for Microsystem SRL. Microsytem SRL was profitable according to Haran.

CIMT in 2006 was breakeven, not profitable from a operational profit. All of their profit last year came on exchange rate gains and interest income. Go look at the financials.

CIMT annual sales have been going down for the last 5 years. Haran only acquired Microsystem SRL to keep it from going bankrupt and out of business.

You're absolutely right... he's total a$$hole trying to get some cheap shares.  I hope he never gets into this stock... he doesn't deserve it.

I figured out today that this is a smart basher who tries to make it sound like he is citing fact, saying he worked in the industry for 30 years, etc.  He actually has done some research on the stock so can cite a lot of information.

But today he used a really cheap scare tactic before the open.  He said the bid was at 0.01 and that CIMT was going bankrupt.  Total BS.  Sure, the bid was at 0.01, it was before the damn open.  The ask was at 2.35 at the same time but he didnt mention that, just tried to use the 0.01 bid to scare someone into thinking that CIMT was going bankrupt.  Really cheap tactics, but its working on some people, that 1.66 yesterday seemed like a market order with someone wanting to get out of a large position, cause it recovered in about 2 minutes. 

Quote from: DragonAMG on July 06, 2007, 01:19:17 AM

Quote from: tokyopua on July 05, 2007, 11:50:06 PM

Quote from: Se7en on July 05, 2007, 05:25:10 PM
David, this is from that basher on yahoo, what's your opinion on this? Tia!

CIMT will wind up paying .25 on a revenue dollar for Microsystem SRL. Microsytem SRL was profitable according to Haran.

CIMT in 2006 was breakeven, not profitable from a operational profit. All of their profit last year came on exchange rate gains and interest income. Go look at the financials.

CIMT annual sales have been going down for the last 5 years. Haran only acquired Microsystem SRL to keep it from going bankrupt and out of business.

You're absolutely right... he's total a$$hole trying to get some cheap shares.  I hope he never gets into this stock... he doesn't deserve it.

I figured out today that this is a smart basher who tries to make it sound like he is citing fact, saying he worked in the industry for 30 years, etc.  He actually has done some research on the stock so can cite a lot of information.

But today he used a really cheap scare tactic before the open.  He said the bid was at 0.01 and that CIMT was going bankrupt.  Total BS.  Sure, the bid was at 0.01, it was before the damn open.  The ask was at 2.35 at the same time but he didnt mention that, just tried to use the 0.01 bid to scare someone into thinking that CIMT was going bankrupt.  Really cheap tactics, but its working on some people, that 1.66 yesterday seemed like a market order with someone wanting to get out of a large position, cause it recovered in about 2 minutes. 

Sounds like he wishes the stock to fall enough for him to buy BEFORE next ER. Otherwise, why wouldn't he let the cards fall as they will, instead of working it so hard now. You can't give these Yahoo posters and masqueraders much, if any, credibilty. For the majority of my holdings, I've never even read the Yahoo message boards and have no desire to do so.

A couple of points; The Microsystem aquisition is designed to strengthen their leading position in Italy and will most assuredly be beneficial to the company, otherwise they wouldn't take the option to do so. Q1 2007 Revs from Italy 29% higher than Q1 2006. In Sept. 2006, they also aquired the remaining 70% interest in their former Korean distributor which is now KCT-Korea Cimatron Technologies.

Software piracy is a problem for all software creators and is NOT at all Cimatron specific. Most legitimate business's won't take the chance using software illegally and also want to have access to updates and company technical support, customization, setup, etc.

I wish I'd have been there late Tues afternoon on the  dip. Looked like a great buying opp, and I want to buy this back again soon.

I've been told that many of the Yahoo bashers are paid to bash the stock. I'm not sure exactly how it works but I do know that no normal human being would spend hours a day reading & writing about a stock he/she had absolutely NO iinterest in buying or holding!  Many bashers post dozens of times a day .. who has time for that?
I have often (but not always) noticed an inverse relationship between # of basher posts and stock price... i.e. the more it is bashed, the more likely it is to go up    I've played FRPT that way several times.

CIMT waking up here?

Yeah, it's nice to see some above average volume without the price going down.

I took a look at the two major owners of Cimatron, Koonras Technologies Ltd, a subsidiary of  Polar Communications Ltd and D.B.S.I. Investments Ltd.

The Polar Group is a large Israeli group, with three companies listed in the Tel Aviv Stock Exchange. Polar Communications Ltd, the subsidiary that owns Koonras Technologies, which owns 33% of Cimatron, is a publicly traded company in Israel with a market cap of 259,099,000/4.2348 = $61.18 M.

The whole Polar Group has a market cap of $178 M.

As for D.B.S.I., the initials mean "Dotan Ben Shalom Investments", and two of CIMT's directors have the same name:



There's a Dotan and a Shalom. I don't think this is a coincidence. Anyway, I got just this information for D.B.S.I..

«DBSI is a private company specializing in investments in mature companies positioned for high growth segments of the technology market.»

I would say 65% or so of CIMT's shares are in good hands. My shares are in good hands too, because I'm going to invest in this company the way its core investors do, that is, I won't sell it just because of a "lower than expected quarter" or a technical breakdown.

Speaking of the technicals, Friday's volume was the highest since May 22nd, 2007.
98,500 shares traded may mean a shift in the short term trend, from bearish to bullish.

I'll keep on holding CIMT.

I've been thinking if the Yahoo basher, who clearly intends to mislead people into selling their shares so he can accumulate as cheap as possible, doesn't have a point about costumers taking two to three quarters to test, approve and finally purchase a new version of software.

But, what the CEO said at the 1st quarter earnings release contradicts that view:

«Commenting on the results, Danny Haran, President and Chief Executive Officer of Cimatron, said, "We are pleased to present another profitable quarter, in line with our strategic plan. Cimatron's financials for Q1 2007 reflect the initial positive acceptance to our innovative CimatronE version 8 for die makers, mold makers and discrete parts manufacturers, and our ongoing efforts to maintain tight expense control and more efficient organization. We are particularly pleased with market feedback to the new Die Design product launched in Q1 2007.»

He said there was already some impact in Q1 2007 financial results, even though the version 8.0 was launched just in March 2007. So I guess we can expect even more impact in Q2.

Beyond the possible Q2 earnings catalyst (and certainly a Q3 revenue and earnings catalyst due to the consolidation of Microsystem) we now have a new "pocket of hope", which is potential accretive acquisitions:

«As we had previously announced, Cimatron's growth strategy is based on internal growth, as well as on mergers and acquisitions. We intend to keep looking for M&A opportunities in order to further enhance our product offering and distribution network.

Cimatron's strong financial position enables us to finance the Microsystem deal from internal resources and to further develop our growth. We believe that being a larger company will open new opportunities to Cimatron in the CAD/CAM industry."»

From these words and looking at CIMT's $5.6 M cash pile (remember it is a $16.8 M market cap) I guess we can have another announcement of an acquisition anytime soon.

From a technical standpoint, we had another constructive day with the stock rising 2.33% on volume above average of 51,700 shares.

I'll continue holding CIMT for the long term.

Quote from: David Randolph on July 09, 2007, 07:18:22 PM
I've been thinking if the Yahoo basher, who clearly intends to mislead people into selling their shares so he can accumulate as cheap as possible, doesn't have a point about costumers taking two to three quarters to test, approve and finally purchase a new version of software.

But, what the CEO said at the 1st quarter earnings release contradicts that view:

«Commenting on the results, Danny Haran, President and Chief Executive Officer of Cimatron, said, "We are pleased to present another profitable quarter, in line with our strategic plan. Cimatron's financials for Q1 2007 reflect the initial positive acceptance to our innovative CimatronE version 8 for die makers, mold makers and discrete parts manufacturers, and our ongoing efforts to maintain tight expense control and more efficient organization. We are particularly pleased with market feedback to the new Die Design product launched in Q1 2007.»

He said there was already some impact in Q1 2007 financial results, even though the version 8.0 was launched just in March 2007. So I guess we can expect even more impact in Q2.

Beyond the possible Q2 earnings catalyst (and certainly a Q3 revenue and earnings catalyst due to the consolidation of Microsystem) we now have a new "pocket of hope", which is potential accretive acquisitions:

«As we had previously announced, Cimatron's growth strategy is based on internal growth, as well as on mergers and acquisitions. We intend to keep looking for M&A opportunities in order to further enhance our product offering and distribution network.

Cimatron's strong financial position enables us to finance the Microsystem deal from internal resources and to further develop our growth. We believe that being a larger company will open new opportunities to Cimatron in the CAD/CAM industry."»

From these words and looking at CIMT's $5.6 M cash pile (remember it is a $16.8 M market cap) I guess we can have another announcement of an acquisition anytime soon.

From a technical standpoint, we had another constructive day with the stock rising 2.33% on volume above average of 51,700 shares.

I'll continue holding CIMT for the long term.

I don't think it takes customers 2 or 3 Q's to test, approve and purchase either. Most likely, CimE8, has been available to many of their customers in a beta test version for many months prior to release. I understand that the customers/potential customers had a great deal of input for creating CimE8. Also if the program is as good as I understand , the release was probably eagerly anticipated and may have even been pre-ordered by some.

This could be big, and I gotta get back in real soon. Seeya at $1.30. Just kidding.

Are we going to the moon 

Not much volume today but a decent candle for CIMT anyway. 

Its funny that the Yahoo basher has made me take more interest in CIMT recently than I would have otherwise, I have been posting a few positive notes here and there on YMB.  Otherwise, I would just continue to be waiting patiently without looking at the stock so much.  But regardless, its nice to have 4 up days in a row.

Quote from: Garoh on July 10, 2007, 03:48:50 PM
Are we going to the moon 

Quote from: tokyopua on July 10, 2007, 05:53:57 PM
Not much volume today but a decent candle for CIMT anyway. 

Its funny that the Yahoo basher has made me take more interest in CIMT recently than I would have otherwise, I have been posting a few positive notes here and there on YMB.  Otherwise, I would just continue to be waiting patiently without looking at the stock so much.  But regardless, its nice to have 4 up days in a row.

I'm glad you guys wrote something about CIMT because I feel I ran out of subject with this one. We really need to kick those bears ass out of CIMT's YMB Tokyopua, thanks for your work

In investment terms, the appropriate course of action for CIMT now is to lock it in a safe and pretty much forget about it for at least two quarters.

Just two small notes, one on the fundamental side, the other on the technical side.

The fundamental issue is that the more the Euro rises against the USD, the better for CIMT, because the company has a bit more than 50% of its sales coming from Europe. As for Microsystems, more than 95% of its revenues are denominated in euros. When translated to USD, revenues and profits will look better just because of this currency effect. The Euro is now trading at an all time high against the USD (which isn't good for my personal finances ).

On the technical side, we have an "important" descending resistance at $2.44 now, but that doesn't really mean anything for the long term share price. I only mention it for descriptive and entertaining reasons.

I'll continue holding CIMT for the long term.