Mems Technology Again!

Wrote about Mems and how it's still unable to produce quarterly earnings!last night.

I'm disgusted, really.

Here are some interesting facts.

1. Company that was plagued by accounting issues, in which MEMS net earnings were overstated by a whopping 26.8%. Net profits were reduced from 21.47 million to just 13.45 million!!

2. Overstated amount was 8.02 million only.

3. Let's consider the impact of the overstatement of the overstating of the earnings. Without the overstatement of the earnings, there would have been zero growth for this stock. And without growth, the stock would never be able to command a high earnings multiple trading price.

4. Using the peak done in July 2007 (on an adjusted basis, Mems actually traded as high as 1.05 in Jan 2005 but since that was early days of its listings, I would not use that figure) of 81 sen Mems had a market valuation of 531 million.

5. At that moment time, based on the OVERSTATED earnings of 21 million, Mems had an eps of 3.3 sen or an earnings multiple of 24.5x. However, given a previous year growth of 55% based on these OVERSTATED earnings, perhaps there were justifications for the stock to trade at 81 sen.

6. And given the fact the impressive growth caused by the OVERSTATED earnings, the market were pricing in earnings expectations of 34-37 million for coming fiscal year.

7. Now the growth is gone. Earnings were overstated. Which means eps is only 2 sen an zero growth.

8. Based on an eps of 2 sen, that 81 sen stock price would have meant that Mems was trading at a whopping 40.5x earnings. For a stock with zero growth that was insane.

9. Mems last traded price before it's suspended is 14.5 sen. Market capital is now only 95 million.

10. So by overstating its earnings by a mere 8 million, based on market capital, Mems managed to value itself 531 million. And if compare to the present value market value of 95 million, this overstating of earnings caused the company to be over valued by as much as 436 million!!!

How?

Overstate your earnings by a mere 8 millions and the stock market could reward you by valuing it an extra 436 million!!!

How?

And not forgetting last night announcement saying that Mems cannot produce its quarterly earnings for the 2nd consecutive quarter!

See why I am so disgusted?

And the following picture shows the trail of destruction of market wealth!