Casino Capitalism

SupportSoft (SPRT): A New Geek Squad?

Despite the negative reaction of the stock market, I believe that the new management team at SupportSoft (SPRT) is moving in the right direction with their new, albeit admittingly still somewhat underdeveloped, direct-to-consumer strategy, which CEO Joshua Pickus discussed in the company´s latest conference call. I encourage interested investors to listen to the call for an excellent overview of the company´s new business direction. 

Essentially, the new plan is an attempt to leverage SupportSoft´s enterprise software assets to create a mass market, customer-support business, that is somewhat similar to The Geek Squad (http://www.geeksquad.com/), a nearly $1 billion unit of Best Buy (BBY). The idea still has some small flaws, but I am pleased that the company is opting to invest a little bit of money on this type of growth path, rather than investing more heavily on the enterprise side. As I mentioned in my first write up of SupportSoft, I do not believe that the enterprise software business is very attractive for investors long-term, given the reliance on large one-time sales and in the case of SupportSoft a limited base of potential customers. However, a successful mass market technical business, though risky to start up and tricky to scale, offers potentially huge growth opportunities.   

Quick Updates

Just a quick note to subscribers: I am currently travelling and will hopefully have more detailed updates on the stocks I recommended, and which have just reported earnings, once I have had a chance to listen to the management conference calls. Importantly, after glancing at the earnings reports for NENG and SPRT, I see nothing that would change my investment thesis, even though the market seems to disagree with me. Both companies are executing well on new business plans, while displaying excellent cash management. Wall Street generally has little patience to wait more than a couple of months for results, so if you have the ability to look out a year or two, I still think these two stocks will provide excellent long-term capital gains.

What´s Your Outlook for...?

I´ve recently received a few emails from subscribers asking about my outlook for a few of the stocks I have mentioned on this blog. Instead of going thru each stock individually, I have some  general observations to make.

A New Plan at Planar

Planar´s (PLNR) stock has sure made for an exciting investment gamble this year. After almost doubling our money in the stock earlier in the year, we´ve now given back nearly all our gains after today´s drop. However, despite the volatility and the loss of all our paper profits, we´re still holding onto the stock. The reason: We like the new, aggressive direction the company is headed in and we plan to hold on to see how this story plays out, even if it takes longer than expected for the company to reignite revenue and earnings growth.

Stratos International (STLW): An Optical Value Play?

I believe that Stratos International (STLW) is an excellent low risk investment "gamble" at its current price of about $6.80, with potentially good odds of providing investors with an above average market return over the next year or two.

Before reading on, please note that STLW is extremely thinly traded, so if you plan to invest in this company, you should use limits. Also, as always, please read the disclaimer at the end of this post.