Friday, 15 November, 8:30 a.m.
10 replies (most recent on top)
“ It is amazing how clueless the bankers and analysts are”
They’re not clueless, they’re in on it. That’s why they forced Cengage to borrow money it didn’t have to pay themselves hundreds of millions in dividends. They’ve known for a while that Cengage is a loser company and are just there to pick the bones until there’s nothing left. But everyone should pay no attention to this and continue to tell everyone Cengage is disrupting education
These calls have been fantastic comedy gold since back to the days of Ron Dunn and company. Anyone who bothered to listen to Dunn knew Cengage was screwed the minute the deal was done with Apax. I've been out of the business for years, but I honestly look forward to them. I feel horrible for all my friends at Cengage, (well, virtually all are gone now,) but listening to the calls is like watching a car wreck. You want to avoid your eyes, but you cant help it.
Hansen has taken the calls to a new level. A true Kabuki theatre.
It is amazing how clueless the bankers and analysts are.
Anyone can dial in.
Click on this link right before the call starts at 8:30: https://www.webcaster4.com/Webcast/Page/2004/32074
They'll also post a replay of it at some point on the investors page.
Do you have to be invited to these calls or can anyone dial in?
"Be prepared to be disappointed. It is the Cengage job to make things look as rosy and upbeat as possible, and they will use a lot of financial jargon and tricks to do so. And while there IS a Q&A, the questions are never critical in nature. THAT type of analysis comes later."
The key is to look at the GAAP reported results in the back of the deck because the finance people can't manipulate these numbers (well, not very much). Cengage has gotten pretty good at reporting made up metrics (i.e. adjusted cash EBITDA less prepub) that gloss over the real story of long-term revenue decline and quarterly net losses.
The GAAP results tell the real story. Focus on the income statement and summary of cash flows. The top of the income statement will report gross revenue and compare it to the previous year's revenue. The bottom of the income statement will report a net income (profit) or loss. Cash and cash equivalent will show how much money the company has in the bank. If this has seriously decreased year over year....look out. The company is burning through cash faster than it can get in the door.
But, yes, I fully expect Michael to sing the praises of CU being an unmitigated success and that "unexpected headwinds" caused a temporary decrease in earnings. I also think the investors have known for some time the company is a loser, and are willing to go along with the charade until the merger is completed and they can dump their investment. Don't expect many tough questions about strategy or leadership.
It's really anyone's guess what will happen with the sales/service calls and when. This report is primarily to report on LAST quarter so there is no reason necessarily to get layoffs done prior to Friday. They just have to say that they've begun the process and that it is ongoing and that's that.
I'm not even sure the losses they announce are going to be that dramatic. Last quarter, revenues were flat and expected to stay that way, perhaps with very moderate growth, and they announced that they were going to deliver profitability and improvement through downsizing, that was that.
It does seem that they want to eek out all potential sales out of the reps before letting them go, so that might mean another few weeks of employment, still. Or it could happen in the next one or two weeks. My guess was that the axe would fall during the week of the 18th so I guess I will stick to that, though it isn't based on anything more than a hunch.
I do think it will be a fair bit more painful this time around than in the past. They are running full-steam like this merger will happen in Jan or Feb and they have a fully-staffed sales & support group over at McGraw that they are inheriting. McGraw's tech is much, much more deeply embedded on campuses than is anything that Cengage has produced, and those rep-faculty relationships are in place. My guess is that they are going to cut deep - close to the bone - on the Cengage side this month or next with the expectation that those roles will naturally be filled from the McGraw side early next year.
If they haven't already, I hope that most all Cengage-side people have begun the job search already. If not, this weekend is an excellent time to get prepared. Don't expect to find much available in Publishing. There are the odd positions that pop up here and there, but there are also an enormous number of former-pubco people (those laid off from Pearson, Wiley and Cengage in the past) who have been clamoring to get back into the business. I've found that any recent PubCo opening - especially for field-based sales - has a frightening number of very highly-qualified people fighting for it. It's pretty cut-throat right now in the publishing job market, so prepare yourself to search in other industries, too.
Regarding the Friday call, those registered can dial in and listen. They do post a slideshow at the time the call starts, so that will be available for all to look at starting at 8:30 or so. They will also release a word-for-word transcript of the call within 24 hours. As this call is happening on a Friday, it could be Friday night nor (more likely) sometime on Monday that this is posted for all to read. Be prepared to be disappointed. It is the Cengage job to make things look as rosy and upbeat as possible, and they will use a lot of financial jargon and tricks to do so. And while there IS a Q&A, the questions are never critical in nature. THAT type of analysis comes later.
Should be interesting.
Can't wait to hear what Michael will be emphatically stressing in this call.
Sales cuts are absolutely next week prior to the call. Buckle up.
Is it likely then that changes/cuts to Sales (which they said are coming) will happen before the call, to be reflected in their report?
These pins and needles are really starting to dig deep.
Get your popcorn ready.