TSK - TASK Group Holdings

[Baa_Baa]

It probably comes out of Microsofts marketing budget. If this was ever big enough to warrant a Microsoft press release, I bet the names you would see in bold would be Azure helping McDonalds, etc. They are trying to show the benefits of Azure to fortune 500 companies and if they have to give a charity case from NZ a bit of support, they will.

Microsoft helped another NZ company recently called Green Button. Eventually Microsoft bought them out. The third tier investors (smaller angel investors) profited around 7.5x their investment.

[robbo24]

It probably comes out of Microsofts marketing budget. If this was ever big enough to warrant a Microsoft press release, I bet the names you would see in bold would be Azure helping McDonalds, etc. They are trying to show the benefits of Azure to fortune 500 companies and if they have to give a charity case from NZ a bit of support, they will.

Let's have a think... Starting with this article:

Already a Microsoft Gold Certified Partner, VMob makes extensive use of Microsoft Azure to deliver its mobile personalisation platform to Fortune 500 brands and retailers around the world, including McDonald’s, 7-Eleven, Esso and Budweiser.

VMob is a Gold Certified Microsoft Partner. What does that mean, though?

Well firstly it means that VMob must pay Microsoft an "annual investment" otherwise known as a "fee". Footnote 12 of the Microsoft page about Certified Partner Requirements, says:

Fees vary by geography. In the case of the Competency membership, partners must pay the silver competency fee or gold competency fee one time, per year—no matter how many competencies they have attained. If a partner attains a gold competency after first attaining a silver competency, then the partner pays only the difference between the two membership fees, unless the partner is within the 90-day renewal period, in which case the full gold competency membership fee is due.

The other requirements are that you need 5 customer references, and, get this, you also need business competency assessments? What is a business competency assessment? Well, Footnote 14 suggests competency equals revenue for Microsoft:

Partners must agree to meet a minimum Microsoft-related revenue commitment that is determined based on the partner’s region and the competency the partner organization is working to attain. Both transacted revenue and influenced revenue count toward this commitment.

So basically VMob pays Microsoft for a Gold sticker. VMob has to keep customers going to Microsoft to keep the Gold sticker.

It is my guess that Microsoft's financial support, or whatever these hype merchants refer to, is just waiving the Gold sticker fee. Would not surprise me in the slightest.

[robbo24]

PS. As I said Robbo, we will see how VMob performs compared to AVB, over the next 12 months.

AVB is up 5.1% for the day with sellers retreating, VML is flat with sellers oozing out of the woodwork. It's going to be an interesting year if that's the start we're off to

[Monty]

You have been ignored, have a nice life.

I wish I had known about this function earlier - Now in place
ahhhhhh no more negavity

[winner69]

Funny thread this one .....a whole lot of blank posts I can't see (except robbo's ones of course). Weird

[robbo24]

I wish I had known about this function earlier - Now in place
ahhhhhh no more negavity

Ah, finally some good advice, goodbye you're ignored.

You have been ignored, have a nice life.

Anyway - back to the real discussion about VML.

Seems to me to be a race to pump it up as quickly as possible (without discussing any bad stuff that any objective observer knows is waiting in the wings) before they are obligated to disclose such bad stuff.

The capital raisings mightn't work so well if things don't look rosey

[YoungBuck]

Forgive my ignorance, but what consequences come from a share consolidation? I want to buy Vmob, but will the upcoming share consolidation affect the share price later?

[robbo24]

Forgive my ignorance, but what consequences come from a share consolidation? I want to buy Vmob, but will the upcoming share consolidation affect the share price later?

If you buy 100 shares right now you will have 4 shares after the consolidation.

At the moment the consolidation takes place the company will have the same market capitalisation because everyone's shares/options get consolidated.

VMob say the consolidation is to be able to list on the ASX with a 20 cent share price requirement. However, this paper probably more accurately explains the effect VMob are looking for:

Stock consolidations (or 'reverse' splits) often occur during bear market periods as a meansof elevating the value of lowly priced stocks. The action of a 'reverse split' allows existing shares in issue to be cancelled and replaced by a smaller number of shares, each with higher par value (than on the old shares). In this paper, consolidations, announced during the 'bear' market period of January 2001 to June 2002, are scrutinised to examine their effectiveness in elevating share prices. Inte restingly, the majority of the 'reverse' splits scrutinised are conducted in tandem with capital reductions.

The combined effect of a consolidation-cum-capital reduction (or capital reduction-cum-consolidation) is to allow a smaller number of new shares (to replace the old) but with par values at similar levels to those obtaining on the old (due to the cancellation of capital through par reduction). A key motivation for this action is to allow companies to issue new equity, which is made considerably easier – as explained in this paper – when share prices are raised to levels above par values.

So, VMob will probably be able to give slightly smaller discounts to private placements if the share price is higher.

Ultimately the effects for existing shareholders is not good:

...stock consolidations (more often than not with adjoining capital reductions) – orchestrated in stocks priced at the lower end of the 'penny' range in Hong Kong – often generate negative wealth effects for incumbent shareholders.

In short, it's greasy and the market doesn't like it. VMob is doing it to tick some ASX boxes and enable themselves to issue more capital at a discount (a discount that appears smaller after the consolidation):

Coupling the consolidation with a capital reduction helps with regard to the inflation of the SPPV variable. As illustrated in the Companion case, the consolidation-cum-capital reduction allowed the par value of Companion's new stock to be set at exactly the same level as the old: HK$0.01. However, with 90% fewer shares in issue, as a result of the consolidation, tradable prices on the stock rose substantially. This is illustrated in Table 2, where Companion's share price, between the announcement date of the stock reorganisation and its effective date, rose from HK$0.016 to HK$0.066. This clearly raised the SPPV ratio of the company’s stock from 1.6 to 6.6. Theory might suggest that this ratio should rise to a level of 16 times. However, it is quite common for stocks, particularly those trading at basement price levels, to experience a notable decline in market capitalisation following such reorganisations. In this case, the company’s capitalisation (when adjusting for movements in the Hang Seng Index (HSI) over theperiod of interest) shrank by around 60%.

The combined effect of a consolidation and capital reduction – in opening up access to new equity issues – is aptly demonstrated by the number of companies that simultaneously deploy such reorganisations with new stock issues. There are also many cases where new issues occur shortly after the deployment of consolidation-cum-capital reductions (or their reverse). This issue is commented upon further in Section 3 of this paper.

According to this paper, and others freely available, the overall market capitalisation goes down.

[Monty]

Forgive my ignorance, but what consequences come from a share consolidation? I want to buy Vmob, but will the upcoming share consolidation affect the share price later?

In theory the consolidation should not impact on share price as the fundamentals before and after listing do not change. At present there is circa 1.5b shares at circa 2 cents per share giving a market capitalisation (company worth ) or circa $30m. at a 1 share for 25 consolidation the shares should be about 50 cents per share. the advantage of the consolidation is that there will be circa 60m shares and no longer will it have the penny dreadful status.

But there is other things happening with VMob and if you read through the publications and announcements on the NZX websites and the Vmob website you will get a better idea of where the company is going and the future. I also suggest you follow VMob on twitter as everyday there is a link related to the type of technology VMob offers.

For my 2cents I think VMob is an exciting company with some great cleints (in particular McDonalds global) and the company is getting a lot of traction in the market especially through the relationship with Microsoft.

I have quite a few shares in VMob and I would buy more if i had the funds (wife and kids etc keep me poorer than I would like)

[YoungBuck]

Thank you Monty and Robbo. I think I understand what you are saying Robbo, I just want to know whether it is to risky buying prior to consolidation. I agree with Monty that the company is very exciting, but when to buy in, I'm not sure.