March 12, 2001
MAINE STOCK TRENDS
A great winter does little for American Skiing Co.
Copyright © 2001 Blethen Maine Newspapers Inc.
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The American Skiing Company (SKI-$1.08) released its second quarter results last week. Note the substitution of the word "results" for "earnings". The company is having one its best skiing seasons in recent memory. Skier visits are up. Revenues are up. Resorts opened early. It was a great Thanksgiving, an excellent Christmas/New Year's week, and a good Martin Luther King weekend. It's fair to say that there's been more snow than anyone really knows what to do with. One could certainly be excused for envisioning company officials "rolling in the snow as well as the dough" this season. Trouble is that's not exactly what's happening. Despite all the great news, the company that bills itself as the largest owner of ski resorts in the country, lost $10 million during the quarter that just ended in January. For the first six months of fiscal 2001, the losses total $34.5 million. That brings total company losses to $131 million in the brief, 3-plus years that the company has been publicly traded.
The stock has been heading south ever since it went public at $18 in November 1997. It reached another all time low last week, falling to as low as $1.06 per share, and losing 7.69 percent for the week. Since the merger with MeriStar Resorts (MMH-$1.69) was announced three months ago, American Skiing's stock has lost more than 60 percent of its value.
MeriStar, which is being acquired by American Skiing, has only lost 25 percent loss of its value since the merger was announced. But, you've got to give the MeriStar management team, which operates out of the nation's capital, credit for trying. The hotel resort operator took a $21.8 million asset write-down in its most recent quarter and it also reported results that were far short of analysts' estimates.
Since the merger was announced, the two companies have already succeeded in trimming a collective $70 million from their shareholder market capitalizations and they have reported quarterly losses totaling $39.2 million.
With approximately 30.4 million shares outstanding, American Skiing's stock market capitalization is fairly small — something under $33 million these days. To put this in perspective, IDEXX Laboratories (IDXX-$22.63), which has roughly the same number of shares outstanding, lost about $45 million in market capitalization in the past week. This figure is about a third more in dollar value than the entire market capitalization of American Skiing.
There is another interesting comparison. American Skiing had revenue of $424 million last (fiscal) year and LOST $52 million. IDEXX had 13 percent less revenue that American Skiing, but EARNED $36 million in profit. That sum, again, is more than the total current stock market capitalization of American Skiing.
I-Many (IMNY-$14) was surprisingly docile last week, down just 1.75 percent. That was noteworthy given that several major shareholders filed over the past couple weeks to sell stock. MSD Portfolio led the pack when it filed notice with the S.E.C. of its intent to sell 751,450 shares. Proceeds are estimated to be nearly $14 million. Also, among the sellers were a number of insiders including Chairman and CEO, Leigh Powell (200,000 shares), CFO Phillip St. Germain (135,000), COO Terrence Nicholson (30,000), and a couple of vice presidents (40,000 each).
It's only been a publicly traded company for about 8 months, but already, listed options began to trade last week for I-Many. Options trading takes place using the symbol MQN on both the American and Pacific Stock Exchanges as well as on the Chicago Board of Options Exchange. MQN options will trade on the February expiration cycle with introductory expirations in April, May, August and November. Initial strike prices have been set at 15, 17 1/2 and 20 on the CBOE and AMEX. For PCX, the initial strike prices are 12 1/2, 15, 17 1/2 and 20. I-Many thus joins Banknorth Group (BKNG-$20.56), Fairchild Semiconductor, IDEXX Labs, and UNUMProvident (UNM-$27.48) as Maine companies that have listed options that trade on their stock.
Up at Merrill Merchants Bancshares (MERB-$10.75) President Ed Clift was a seller of his stock also. Clift sold 17,500 shares Merrill Merchants last month. That's a decent chunk of stock. On average, Merrill Merchants stock only traded about 3,376 shares per day last year. Year to date, the stock price at the Bangor-based bank holding company was up 22.8 percent as of last week's close. That includes a gain of 1.78 percent last week.
Fairchild Semiconductor (FCS-$15.55) was unchanged for the week. Now that all NYSE stocks are trading in decimals, it's impressive when any high tech stock remains unchanged in price at the end of the week. What's even more impressive is that the stock managed to stay even in the face of bad news. Last week, the company issued a press release stating that first-quarter revenue would be about 20 percent lower, which is even less than the Street had been expecting. Customer inventories, according to the company, are building amid softening technology spending. What's worse, the CEO stated in the release that, "Our visibility into the second quarter remains uncertain."
Credit Suisse First Boston didn't wait for the "chips" to fall. The next day, the investment brokerage firm nearly cut in half its earnings estimate for 2001, dropping it from $1.55 per share to $0.80 per share. As recently December, the consensus of analyst's estimates called for Fairchild to earn about $3.09 per share this year. And, yes. Things have turned that bad, that quickly. The revision to $0.80 per share does indeed represent the "annual" earnings estimates, not a "semi" annual estimate.
Brad McCurtain is president of Maine Securities Corporation. Maine Securities Corporation is an investment firm specializing in Maine's securities. From time to time, the corporation, its employees, and its clients may buy, hold, and/or sell positions in companies mentioned herein. As a regulated securities broker/dealer, the company and its employees are required to abide by all securities regulations at all times when communicating with the public. Brad McCurtain may be reached at info@MaineSec.com. Web site: http://www.MaineSec.com