Wednesday, June 29, 2022

Cartesian Inc (OTCMKTS:CRTN) is Sinking Like a Stone

Cartesian Inc (OTCMKTS:CRTN) is dropping like a stone this week. CRTN is now at a negative 32% for the week and they are still seeking the bottom. Ouch.
CRTN released financial data yesterday and it was not pleasing to the eye. Revenues in the third quarter of 2017 decreased by 26% to $12.8 million from $17.3 million in the same year–ago period.  The decrease was primarily due to lower volumes of projects in both North America and EMEA compared to the prior year quarter. Gross margin was 32% in the third quarter of 2017 compared to 35% in the third quarter of 2016 primarily due to project mix. Gross profit decreased 33% to $4.1 million in the third quarter of 2017 compared to $6.1 million in the third quarter of 2016. The decrease in gross profit was primarily due to unfavorable project mix in North America, according to the company.
Cartesian Inc (OTCMKTS:CRTN)  formerly the Management Network Group, Inc., is a provider of professional services and technical solutions to the communications, digital media and technology sectors. The Company has three segments: the North America segment, the EMEA segment, and the Strategic Alliances segment. The North America and EMEA segments include the Company’s operational, technology and software consulting services inside of North America and outside of North America, respectively. Both the segments offer management consulting, custom developed software and technical services. The Strategic Alliances segment includes the Company’s around the world commercial activities undertaken with third-party service or solutions providers. It provides a portfolio of consulting services and managed solutions to clients in the communications, media and technology industries, including technical consultancy; revenue and cost management; technology solutions, and investment advisory services.
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CRTN’s new Chairman made some pretty direct comments on the company call, see below:
“…I want to acknowledge that we recognize the company’s performance has not been acceptable. I think you can tell by the recent changes, which were pretty substantial that, the board felt, substantial changes were necessary. And right now, we are singularly focused. Every Director, every Officer has one goal in mind that is the stock price, that is the shareholders. That’s why I was appointed to this position. And I can assure you that, that is my focus.
While I don’t want to rehash all the reasons we’re here, I prefer to focus on what lies ahead, give you an opportunity to ask me questions and tell you what our immediate plans are, things that we can to do to impact shareholder value.
…I can tell you that what we feel is that the declining performance of this company is largely a result of structural inefficiencies in the way the business has been operated. There’s no doubt that there’s been a significant decline in revenues. Some of this is related to large projects that are completed with customers, a lot of our sales are in big chunks, and it’s — the company is duty-bound to replace that revenue as it falls out, and we have not done a good job of reacting quickly enough to replace that revenue.
We have, however, as has been reported in the last few calls, undertaken a cost-reduction effort, and while the costs have been reduced significantly over the past year, the impact of those cost reductions, because of the nature of how commitments are and how it takes a while to get payback on cost reductions, we have not been able to keep pace with the declining revenues.
However, the good news is that these are structural problems that can be fixed. I don’t want to delve on why they hadn’t been fixed till now. But they can be fixed. They can be fixed. They are identifiable. Management has a — and people looking at us know they can be fixed. Management knows they can be fixed. And we’re in the process of fixing them.
The management reorganization was a first step. These changes will result in some short-term cost reductions, will eliminate some structural inefficiencies, and should have an immediate impact on short-term performance.”
While CRTN is down, the new leadership seems to be committed to turning this ship around. They have a long way to go, that is for sure.
Cartesian Inc (OTCMKTS:CRTN) now has a market cap of $2.7M and with today’s losses is down close to 70% YTD. The leadership team at CRTN needs to get to work fast because the sellers are out in droves. Sign-up for continuing coverage on shares of $CRTN stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: We hold no position in $CRTN, either long or short, and we have not been compensated for this article.

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