PCGS 10-K SEC filing doesn't sound particularly positive to me....

[James_OldeTowne]

My bolds:

 

Collectors Universe, Inc. (Nasdaq: CLCT), a leading provider of value-added authentication and grading services to dealers and collectors of high-value collectibles and diamonds and colored gemstones, announced that today it filed a Form 12b-25 with the Securities and Exchange Commission notifying the SEC of a delay in the filing of its Annual Report on Form 10-K for its fiscal year ended June 30, 2008. The Company expects to complete and file its Annual Report on Form 10-K with the SEC before the expiration of the fifteen-day extension period under SEC Rule 12b-25. As reported in the Form 12b-25, the completion of the Form 10-K has been delayed because the Company is conducting, in accordance with applicable accounting rules, a valuation to determine the amount of an expected non-cash impairment charge to the carrying value of the assets of its jewelry businesses and the related impact on our income tax provision.

 

The Company also provided, in that Form 12b-25, certain preliminary financial information relating to the results of its operations for the fiscal year and fourth quarter ended June 30, 2008, indicating that it expects to report (before giving effect to the impairment charge) increases in its operating loss and pre-tax loss to $6.5 million and $5.4 million, respectively, for fiscal 2008, from approximately $2.9 million and $0.8 million, respectively, in fiscal 2007 while for the fourth quarter of fiscal 2008, the operating loss decreased to approximately $1.7 million and the pre-tax loss increased to approximately $1.5 million, compared to the operating and pre-tax losses of $1.8 million and $1.3 million, respectively, in the fourth quarter of fiscal 2007. For the fourth quarter of fiscal 2008, the decrease in our operating loss (before giving effect to the above-described impairment charge) as compared to the fourth quarter of fiscal 2007, is primarily attributable to lower trade show coin revenues offset by higher revenues in our other businesses and lower operating expenses while the increased pre-tax loss reflects lower interest income.

 

A copy of the Company's September 15, 2008 Form 12b-25 is available at the Company's website at http://www.collectors.com.

[physics-fan3.14]

Well, their stock is dropping like a rock, thats for sure. How long can they keep bleeding money?

[WoodenJefferson]

<>

 

This statement pretty much says it all, this area of CU has weakened significantly in the past year and is no longer what was once to be considered a cash cow for CU.

 

Accounting tactics and I don't think anything should be read into this disclosure.

 

Ebb and Tide economy will create these kinds of bumps.

 

[DC Dawg]

I mentioned something like this before. Collectors' Universe was trying to ramp up a gem grading program, similar to GIA. Part of doing that requires a significant reference library of gems that are used during the grading process. Reference grading is not new. The other services use this to help in their process--especially that gems are "technically graded" and not "market graded." Accuracy counts.

 

Buying properly graded diamonds in the various cuts, colors, and clarity is not cheap.

 

I would have to look at their balance sheet. But if they are hemorrhaging that much money relative to their income, then this may not be a good venture for them.

 

Scott

[MikeInFL]

In addition to the sobering financial news in this filing, you generally don't see well-run companies filing for extensions with the SEC. While PCGS certainly has been a money maker over the years, as an investment it is a poor one, in my opinion (primarily because of a lack of an effective revenue growth stragegy)...Mike

[BillJones]

Let’s face it. The product life cycle for the coin grading business is into its mature and declining phase. Most of the “good old stuff” has been certified and further services are not really needed. That’s one of the reasons why we see all of this playing around with new gimmicks for the modern stuff.

 

That plus the poor customer service that PCGS provides add up to a less than rosy future for the company. A couple dealers I know have expressed far less optimistic assessments than that to me.

 

[gmarguli]

The US coin market may have had a significant number of coins graded, but the slabbing in world coin market is only in its infancy stage. Whether PCGS/NGC will be the big player or another service remains to be seen. However, it is clear that the marketplace is moving toward slabbed world coins. Check out foreign auctions and you'll see them appearing more often. Several European dealers who used to laugh at slabs are now submitting their coins. Money talks and people are scared of the high quality counterfeits coming on the market.

 

Also, as the collecting public becomes dumber (and it is clear they are), they will want even lower value coins slabbed. The TPG can easily attract this market with a super-economy tier for maybe $8-$10. Very little liability for the TPG, no need for their top graders to examine these, and a massive pool of coins to be slabbed.

[BillJones]

So given your statements about European collectors, would be fair to say they have watered down their grading standards? In past “European grading” was far more conservative than legitimate U.S. grading standards. Generally it seems that the standards where one “word grade” higher (i.e. if the coin graded EF from U.S. standards it was only a VF by European standards. I can’t believe that PCGS and NGC suddenly got tougher when their produces crossed the pond.

[gmarguli]

I think that many dealers are using more liberal grading standards. I don't know if this is the result of the TPG grading more world coins or more US buyers buying them or something else.

 

I know that I don't find coins marked as EF that are Choice BU as often anymore.

[Conder101]

So given your statements about European collectors, would be fair to say they have watered down their grading standards?

He didn't say anything about European collectors, he said European Dealers. And those dealers are probably selling those slabbed coins back into the American market or to new collectors who haven't bothered to learn the European grading. (Just as many Newbies here will spend a lot of money on US coins without knowing anything more about the coins than the number on the holder.)

[just-john]

Think CLCT is one of the novelty stocks where the only people making money are the corp officers

buying and selling or giving and getting warrant's for stock at a cheap price and turning it.

If any funds got involved with it I would think their shaking their heads wondering why