So, the Grizzlies have a new owner. Or so they say. 34-year-old Robert Pera has given Michael Heisley an 8-figure deposit toward buying the team for $350 million. Of course, Pera doesn’t actually own the team yet, because there are other steps involved – mainly, approval by the NBA, which will take at least 60 days (and probably much longer).
My prediction is that Pera will never own this team.
Pera is being called a billionaire, based on the percentage of stock he owns of the company he founded, Ubiquiti. Ubiquiti sells wireless Internet products to emerging markets. After the stock went public, it hit a high point of almost $36 a share, making Pera worth about $2 billion. However, it has since fallen to about $12. Pera is no longer a billionaire.
In fact, if the stock price halves again, Pera won’t even be able to afford to buy the team. And there’s a lot of reason to believe the stock will drop by another 50%. As someone who self-manages stocks in a Roth IRA, I see a lot of signs of disaster in this company. For one, I’ve been taught that it’s bad if a company has more than 3% of its stock sold short – in other words, more than 3% of investors believe the price will go down in the future. Ubiquiti has 54% of its stock sold short right now. Its accounts receivable days are on the rise. Its business model is to sell to distributors, but somehow these distributors are selling equipment to Iranian companies and possibly North Korean companies too. That’s a big no-no. Then there’s the fact that they book revenue when equipment is sold to distributors, rather than end users. That’s a very aggressive accounting model that could be used to push a lot of equipment to distributors that they know they will never be able to sell, in order to prop up profit margins in earnings reports (“channel stuffing”).
This CNBC article says it all. Pera needs to devote 100% of his energy to running the company. He got rich quick and decided to buy himself a toy. It’s not time for toys yet.
My prediction is that Michael Heisley just got an eight-figure payday and will still own the Grizzlies when all is said and done.
Yesterday, a few hours after the “sale” was announced, @MemphiSport asked its Twitter followers what is the first thing they would do after buying the Grizzlies. I responded that I’d add a Grizzlies tube top to the merchandise line. That was good enough to get retweeted.
In other news: B.B. King’s is doing a “dollar deal” for ribs Tuesday-Thursday 2-5 PM. A dollar a rib bone, minimum order 4, maximum 8, with reorders of 4 bones at a time. No to-go orders or boxes, and not valid with any other promo. More info here.
The FedExForum has lost the 2013 Conference USA tournament. To punish Memphis for leaving, C-USA has voted to move the tourney to Tulsa. As nearly every sports commentator in town has pointed out, instead of packed houses, now the tournament will be shown on TV with a mostly empty arena, showing C-USA to be the crummy conference it is.
Congratulations to the Arkansas Razorbacks. They defeated Baylor to advance to the College World Series. Go Hogs!
An iPhone app called Beer Buddy, normally $3.99, is free in the App Store today. It lets you scan bar codes on beer bottles and get info about the beer.
Plans for tonight: Tube Top Tuesday at Bardog, poker at Blind Bear, then Saucer.