NGC grading on time

[chinook]

With all the complaining across the street about extremely slow grading I thought I would congratulate NGC on their fast, efficient, and accurate grading.

 

I sent an economy order dated 1-20-04 and got my grades today. 23 calendar days!!!! And this included a major show on the other side of the country.

 

I know the other side will read this and flood NGC and slow them down for the rest of us, but business usually prospers when customers are taken care of and you provide a quality product.

 

Great Job NGC!!!!

 

 

[truthteller]

I think NGC is becoming more of a threat to PCGS all the time. More and more members on the PCGS forums are dumping PCGS and going over to NGC. I'm just so surprised that it has taken so long for the folks to come around.

 

 

TRUTH

[Tradedollarnut]

80% of a company's profits come from 20% of their customers - and the same ratio applies to problems as well, but it's a different group of customers.

 

While NGC's level of service to the small collector is commendable, don't be fooled into thinking that a few chatroom board members switching their submissions will do one iota's bit of good or bad to either company's bottom line.

[truthteller]

Boy, do I disagree. CU's bottom line is driven by corporate profits, and stockholder's satisfaction, which often motivates a company to look at short term results rather than long term benefits. CU sees short term. NGC looks long term. NGC will not make the same mistake and take the company public. This eventually will be CU's failing. Already, CU is spining off several assets subsidiaries, such as B&M, to raise some cash. NGC is not.

 

 

TRUTH

[Tradedollarnut]

Already, CU is spining off several assets subsidiaries, such as B&M, to raise some cash.

 

Not true. Their balance sheet is quite solid - they have no use for cash. If they needed any, they could borrow it quite easily.

 

The divisions being sold off are underperforming units that revolve around their former owners. While I agree that the sale of these units is the result of a failed expansion policy, your reasoning of why they are being sold is not sound at all.

 

I doubt if the submissions of all the chatroom members in their entirety amount to more than one tenth of one percent of either company's revenue. That's simply not much profit. While it is nice for a company to try to be everything to everyone, eventually most realize that they can't.....

[truthteller]

" I agree that the sale of these units is the result of a failed expansion policy"

 

 

 

Does this mean that the CU leadership is bad, inept, or poorly directed? If this happened with larger corporations, there would have been a major shakeup in the company. Again, CU looks short term, NGC does not. Whomever chose to oust Bowers made a majorly poor decision, and I think it was more an clash or personalities from CU, which affected the company adversely. If CU didn't need B&M, why not revitalize it, rather than spin in off? Reinvestment into the company and product is key for longterm stability. CU, unfortunately, would rather cut and run. The perception of CU has NOT improved over the course of six months, while NGC customer perception has. In addition, I constantly hear CU has a solid balancesheet and lots of cash. Good for them. Yet, the product line is faltering, the prices escalating, the management uncaring to the consumer. It now costs $200 show submission for what $85 covered 1 year ago. So when the cash is gone, what is left? Remember, when all the coins reach MS69, there isn't much room left for the crackout guys, and that's sooner than most would expect. My .

 

 

 

TRUTH

[gmarguli]

Already, CU is spining off several assets subsidiaries, such as B&M, to raise some cash.

 

Not true. Their balance sheet is quite solid - they have no use for cash. If they needed any, they could borrow it quite easily.

 

Are you so sure about that? Just a few months back they were looking to borrow something like $20 million so that they could beef up their B&M division and give money to consigners before the actual sale of their coin. Remember this? What happened? My guess is that the so-called "happy to lend them and their solid balance sheet money" marketplace told them to go themselves and they didn't get the money they needed. A few months later they cut their likely MAJOR losses and dump B&M. Who knows, maybe they did get the money, but I doubt it especially considering that they sold out to a deep pockets company.

 

If I were an investor in this company I'd be scratching my head as to why this business unit is so great and why they are fluffing it up and then turn around and dump it a short while later. Something is wrong.

 

Why are PCGS submissions up so much, yet the money doesn't seem to be flowing to the stockholders - except a few on them. Why does this strong company have a negative ROA, a negative ROE, a negative profit margin, a negative operating margin, a negative ...

 

And if all this is happening while PCGS submissions have soared, what will happen when the market cools off and submissions dry up?

 

CU is so poorly managed that it cannot survive in its current form. It needs objective management that runs the company for the benefit of all the stockholders, not just a handful of them.

 

 

I doubt if the submissions of all the chatroom members in their entirety amount to more than one tenth of one percent of either company's revenue. That's simply not much profit. While it is nice for a company to try to be everything to everyone, eventually most realize that they can't.....

 

I think your numbers are off, but I somewhat agree with what you are saying. Assume each grading service does 100,000 coins a month. One tenth of one percent is 100 coins. I personally submitted well over 100 coins to NGC in January. Now my coins aren't going to make a difference, but they do add up with a lot of other people. And what is more likely going to happen, big dealers will only use PCGS and sell those to their customers, or big dealers will look at their customers submitting coins to NGC and accepting them and then start to realize that they too can submit to NGC and have a buying audience for these coins?

 

In my business I'd never turn away those small crumbs. They add up and they can become a core part of your business over time.

 

And last I heard, NGC did more business than PCGS. Something must be happening. If I were PCGS I'd be very scared of the prices some NGC moderns are bringing and the dying interest in the PCGS-ego-only registry. That's the core business to PCGS and NGC is slowly taking it away. From what I have seen the people running PCGS don't have the brains to see this and combat it.

 

But what do I know, I'm biased and clearly can't form any opinion that says PCGS is less than God without my bias showing.

[Tradedollarnut]

Shrug. No grading company is God as far as I'm concerned.

 

I stand by my assertion that CU doesn't need the cash. And, although I first thought it was a mistake to fire Bowers, I came to realize that it truly was oil and water and eventually he was gonna leave on his own. If that's the case, then most owners/managers do end up firing the person. That's how it works in the real world. The real mistake was in buying B&M in the first place. That acquisition never seemed to pan out [same with others].

 

There's a slight flaw in your math, Greg. I said revenue, not submissions. The chatroom tends to gravitate toward the economy submission [ergo all the griping about turnaround time]. This is cheaper by around a factor of 10 - therefore your 100 coin number is actually around 1000 coins per month. But I was just throwing a number out there to make a point. Doesn't much matter to me either way....

 

The longer turnaround times may actually have a positive effect on the bottom line. Most of the people that switch are lower price submittors. The lower price tiers have the lowest profit margin. The people that don't switch tend to use the faster services in order to get their coins back quicker - thus higher margins.

 

With regard to the new $200 service ... well, that just seems smart to me. Pricing hasn't moved much over the years, despite increases in overhead - particularly professional graders salaries. I'm certain there are plenty of submittors willing to pay that price in order to get their coins back quicker. Don't like it? Then don't pay it.

 

There's no doubt that CU did not have a good long term plan for integrating their acquisitions. And thus going public was probably a mistake. But please don't make wild and erroneous statements like "they're selling off divisions to raise cash" when it's pretty obvious that's not the case.

[dakra]

In some instances, TradeDollarNut's words make absolute sense. I see one common thread. TradeDollar sells coins to a higher 'class' of coin collectors. He makes a nice profit for the amount of work he does. If he sold 'modern' coins, he would probably have to do more work, sell more coins in order to make the same profit he is making now.

 

Perhaps PCGS is concentrating more towards the more expensive tiers or the higher 'class' of coin collecting so they can make more profit by not doing the 'modern' submissions. Their profit margin is higher by gearing themselves more towards the expensive tiers.

 

David Bowers was probably making a good deal of money as a partner in B&M. If PCGS bought him out, they would no longer have to pay his salary, they could pay someone less and bring in more profits to PCGS/CU through the B&M label.

 

Unfortunately, the perception to many people is that PCGS is not very well organized or run. Their recent failings to get the turn around times down has turned some collectors off and they are now submitting to NGC. Seeing that NGC grades just as well as PCGS, seeing NGC grade faster then PCGS, they may turn their allegence to NGC. NGC could very well become the grading service of choice.

 

Hmm... conspiracy theory... PCGS just wants to be the grading service of the upper class coin collectors?

 

Thanks,

Dave

[truthteller]

I've got to agree with Greg, these are good times in the coin industry and PCGS should be improving it's image with ALL the submittors, not just the big cheeses. I remember quite well 1988, when the collector was pushed away by the coin dealers who were in search of the investor fish. Now 50% or more of those dealers are GONE, and the collector, TO THIS DAY, resents being treated poorly. Thus, we have PCGS, who treats the collector POORLY, and most dealers not much better. One day, very soon, the market will turn, so will the grading services and 50% will be out of business. NGC will be there, others will not.

LONG TERM GROWTH is good. SHORTSIGHTEDNESS is bad.

 

 

TRUTH

[currentcoin]

Truth you are so right.

But by the time you are right PCGS will have made all the money and the top people will be fat and gone.

 

Nothing short of scandel will stop them for now with the momentum they got going.

 

Glen

[chinook]

Since PCGS is a public company-symbol CLCT- they must prepare public documents for its shareholders. One source to get this information is Multexinvestor.com.

 

From this website I copy the following-------CLCT authenticates & grades the quality of coins and sportcards & authenticates autographs & memorabilia. CLCT also conducts collectible auctions over the Internet, by telephone or in person. For the three months ended 9/30/03, revenues rose 36% to $17.2M. Net loss before acct. change rose 46% to $431K. Results reflect growth from Collectibles Sales segment and direct sales revenue, and lower goodwill amortization expense.

 

As you can see revenues(submissions) increases dramatically last summer, but the company still lost money. A breakdown of their income statement reveals that they actually earned $400,000 for the quarter. Not alot compared to the salaries of the graders. Also revenues for the quarter were the highest in the previous 4 quarters.

 

A look back over the previous 5 years shows that from the companies core business--accountants like to play fancy games were this is involved--shows losses totaling $3.3 million. They were profitable in 2000 when revenues were 20% lower than 2003.

 

CLCT also reports having $8.7 million cash in their coffers as of 9-30-03.

 

My take on this is unless revenues increase substantially and cost are drastically reduced, this company will be in receivership with a few years.

 

There is much to be discussed here but my internet connection is being interrupted every 10 minutes so I will leave it to you guys to discuss further.

 

[sanmary]

I believe that PCGS is POORLY managed, as is CU. How long can a company spit on many of it's customers and get away with it. I have been in the restaurant business for about 17 years now and we make our dollars, pennies at a time. I treat each customer exactly the same way. My business grows by word of mouth and repeat business. If I screw someone I probably lose not only that person, but another 5 or 10. Sooner or later it will come full circle.

[truthteller]

You're exactly right. CU went public just before the huge upcycle in the coin market. If CU were public during 1991-1993, it might have gone bankrupt. Get this:

 

 

1)A substantial amount of high end rare classic coinage has already been graded.

 

2) Most of all truly rare and expensive coinage have been graded and regraded to get to a max out point.

 

3) Many of the super large collections have already come out into the marketplace and have been graded.

 

4) A substantial amount of bullion related US coins($20 Saints, etc) have already been graded.

 

5)Many, many submitting dealers are lacking in 'crackout' candidates to make the higher grade.

 

6) Since PCGS went public, the company has yet to see the market 'tank' with a huge selloff into the market place.

 

 

With these conclusions, it seems to reason the future MAIN SOURCE of submission revenue will be lower level collectors and collectors of modern and mint issue products. These WILL BE the future of the grading services revenue for years to come. Who alienates these collectors? Well, you know.

 

 

TRUTH

[gmarguli]

I sent an economy order dated 1-20-04 and got my grades today. 23 calendar days!!!! And this included a major show on the other side of the country.

 

My coins arrived on 2/3/04 and they went into Quality Control today, 2/13/04. That's 10 days for the modern service level.