Northamber – will they ever do the rational thing?

PUBLISHED: 12 Sep 2016 @ 20:07 | Comments (0) |

For years I’ve tried to persuade the founder and dominant shareholder of Northamber (LSE:NAR), David Phillips, that the most risk-strewn path for shareholders is to keep on desperately trying to get back to profits in the operating business.

The company remains a small player in an industry with very poor economics, no pricing power vis-à-vis customers and no bargaining power with suppliers. Customers have plenty of substitute methods to turn to when buying electronic items. It has no competitive advantage.

It is using over £20m that could otherwise be given to shareholders (that is 71p per share compared with the current share price of 31p) and this is the sorry profit history:

	Profit after tax
2015	Loss £0.89m
2014	Loss £1.16m
2013	Loss £0.98m
2012	Breakeven
2011	Loss £0.1m
2010	£0.17m
2009	£0.05m

I see no reason, other than freakish chance, that it will return to generating anything like the £2m annual profits it needs to justify holding on to that amount of shareholder’s money. It is all but futile to keep punting shareholder’s savings on new product ranges and revamped marketing based on misplaced hope. There are simply too many competitors willing to cut prices to the bone.

They have tried valiantly to get back to profits, but my view is that it just ain’t going to happen. Any value in the shares is founded on the prospect of liquidation, followed by a cash pay out to shareholders. But this will only happen after a full realisation by David Phillips, aged 71, of the hopelessness of the operating business – he has shown no indication that he wants to give up.

If liquidation does not come about soon the value in the company will continue……..To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.