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Letter to the Editor

This article originally appeared in the February 2003 Issue of INSIGHT

Off to a Good Start

Collision Industry related stocks did in fact get off to a good start the first two weeks of the year. While two weeks does not a year make, let us hope that it sets the tone and that my prediction last month that we have hit the bottom and are on the way back comes to fruition.

This month we are dropping Parts.com from our monthly review. As far as I can tell, this dog is dead, now selling for under one cent per share, and we all know that even kids won't pick up a dropped penny.

In some respects I would also like to drop our coverage of DriverShield, as this company has not only been a lousy performer in the Market, but on January 21, the company announced the acquisition of Presidion Solutions, a Troy, Michigan-based professional employer organization with estimated sales of $380 million in 2001, while DriverShield had sales of $1.7 million for the same period.

Presidion has about 50,000 worksite employees. These are workers who, rather than being direct employees of the company where they work, are paid by Presidion, being then the employer of record.

News of this acquisition pushed the price of Driver Shield stock up to 70 cents, still under the $1 requirement for continued NASDAQ listing.

This merger or acquisition (yet to be consummated) is a bit strange. The "rent an employee" business is far different from anything in which DriverShield has been involved in the past. It would appear that the only thing DriverShield brings to the party is cash to assist Presidion's cash flow needs.

Bottom line: Rather than dropping DriverShield from our list based on its move out of the automotive arena, we will keep it around to see what happens. Could be that Barry will have the last laugh.

On a truly positive note, CCC Information Systems continues its recovery in profitability and share price. This company has refocused on the core business, and it appears to be paying off. No more international, no more expanded moves to parts ordering, no networking of shops, nothing outside its core.

ADP stock, on the other hand, continues to slide downward. Perhaps its current chairman and CEO, Arthur Weinbach, may in good conscience be considering taking a cut in pay from $2.4 million plus $1.8 million in executable options to a bit lower level, helping to turn the operation around.

The only news out of ADP's Claims Services has been that Rick Tuuri has left, perhaps supporting rumors of pending cutbacks in product and staff. It is still a tough market out there.

To end this column on an upbeat note, I will comment on this year's Detroit auto show, the biggest and best in the history of this major automotive event. Consumers are still buying new cars and trucks, and the optimism of OEs, dealers, and consumers may yet lead us out of the woods this first quarter.

-Charles Baker-

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