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Letter to the Editor
This article originally appeared in the July 2001 Issue of INSIGHT
The Joke's on Parts.com
Well, at least there IS news...
It is always fun to see a little humor in the financial news, and this month we start out with a truly humorous quote from the president of Parts.com, the Florida-based company that has managed to lose over $21 million since its founding and is now down to 16 employees.
After announcing a one-for-ten reverse split in the stock after it has dropped from close to $30 to 16 cents, Shawn Lucas, president and CEO of Parts.com, made the following statement: "It is the unanimous belief of the company’s Board of Directors that the decrease in value in the share price has resulted in an unattractive stock price."
This truly profound comment may well be the understatement of the year.
Parts.com, which intends to compete with both OE Connection (which has connections to automakers Ford, GM, and DaimlerChrysler) and ChoiceParts (ADP, CCC, and Reynolds & Reynolds) is having its problems. We quote from their latest filing with the SEC:
"As noted in the company’s Form 10-KSB for the year ended December 31, 2000, the company has experienced significant operating losses and an accumulated deficit of $21,838,164 at March 31, 2001, which raise doubt about the company’s ability to continue as a going concern. The company incurred additional net losses of $1,214,199 for the three months ended March 31, 2001. The company is continuing its efforts to increase its sales volume and attain a profitable level of operations. However, there is no assurance that the company’s efforts will be successful.
"At March 31, 2001, the company has a working capital deficiency of $3,756,196 and cash of $516. The company also has not deposited payroll taxes with the Internal Revenue Service for the period April 2000 through November 2000, resulting in an accrual for back payroll taxes in the amount of approximately $378,000 as of March 31, 2001, including, including penalties and interest. Furthermore, the IRS issued a levy against two of the company’s three bank accounts on April 30, 2001."
As we have stated in past articles, these guys are on a par with Driversshield.com. Both do not recognize that collision repairers need to make a profit - Parts.com by trying to sell parts at MRSP plus freight, and Driversshield by charging shops 12 percent of the repair order for sending them the business.
Unfortunately, major players in our industry are also having problems, albeit not as severe. Sherwin-Williams and BASF both have announced lower than anticipated earnings, based on lower sales and increased raw materials and manufacturing costs.
On the good news side, Copart continues to generally show increases in sales, profits, and the price of their stock, and the same can be said of Keystone, FinishMaster, Insurance Auto Auctions, and, with one of the biggest overall gains in value - Progressive Insurance.
Is the economy turning around? Will tech stocks rebound? Will well-run, profitable companies like Corning Glass, whose stock has dropped from a high of $113 to a current low of around $14, recover? I remain optimistic, and believe that, as we go into the second half of the year, we will see a gradual recovery across the board.
-Charles Baker-
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