Yesterday Black Box Corporation (NASDAQ: BBOX, $26.78) closed down 32% from Tuesday’s closing stock price. Yesterday’s drop may seem like a harsh reaction to a Black Box press release that includes a statement that Black Box feels, “very strongly that we have built a service offering that is strategically relevant and has no peer.” Black Box’s press release also states that, “from an overall marketing perspective, with approximately 3% market share, Black Box today is the largest service company in this space. We believe, through proper execution, there is an enormous opportunity to capture significant market share in this very fragmented $20 billion market.” and that, “we are just in the early phases of exploiting the service capabilities of Black Box.”
Well investor advocates (sometimes referred to as “short sellers” in the financial media) have a different perspective about Black Box’s prospects. On October 15, 2002 we wrote to Black Box. We asked for an explanation of Black Box’s reported increasing margins while sales were rapidly falling despite its continued and expensive acquisition spree. Black Box’s press release did not state that its expected $131 million in revenues for the quarter ending March 31, 2002 is approximately 50% below its pro forma revenues for the same quarter two years ago. To an investor advocate (short seller) that fact seems worth noting.
You can read ###211.gif::our letter to Black Box ###on our website at www.asensio.com. Unfortunately, we did not get a response to show you.
Asensio & Company, Inc. is actively engaged in short sell investments and publishes research on securities it believes are overvalued. A complete documented history of Asensio’s published work with short-selling transactions, and the firm’s definition of gross overvaluation, is available on the Internet at www.asensio.com. John Wiley & Sons, Inc. has published a book about Asensio & Company’s short selling titled “Sold Short: Uncovering Deception in the Markets.” The book can be ordered on the Internet at www.asensio.com.