RSSHow Long Does Ziff Davis Have Before It Runs Out of Cash?
On December 31, 2006, Ziff Davis had $15.4 million in cash/cash equivalents. After borrowing $20 million on February 15, the company has $22.2 million in cash/cash equivalents as of March 31, the close of the first quarter.
I’m not a financial guy, but I can do basic math. If you add the $20 million they borrowed with the $15.4 million they had at year end 2006, they should have at least $35.4 million at the end of Q1…that is, if they didn’t need to burn through any cash to continue to run the business. We’re looking at a gap here of $13.2 million.
If current trends continue–a hypothetical if there ever was one, let’s say for safety’s sake–and Ziff Davis doesn’t borrow any more money, they should run out of cash some time in the middle of Q3.
When you run out of cash, you’re out of business.
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Jeremy,
Yes, Ziff has financial challenges but be careful with the quick math. You’re overlooking some basic facts. Ziff had to make a big dept payment in 1Q 2007. That explains why so much cash disappeared during the quarter.
In recent SEC filings, Ziff Davis Holdings said it believes it has enough cash for the rest of 2007 — though that’s not a guarantee, you should have at least looked at the filing.
In an email to employees earlier this week, Ziff’s CEO said he hoped to share an update about the company’s strategic options soon. Sounds like something is brewing — though we’ve heard that numerous times before.
Still, you should have taken the time to read the SEC filings to understand how much dept the company has, when the debt is due to paid (in increments), how interest rates could adjust the debt payment fees, etc. And again, there’s the simple statement within the SEC filings that claims Ziff thinks it has enough cash for the rest of this year.
Your comments are much appreciated, Ziff Watcher. I did read the filing, but must have missed that section. I perhaps should have stressed that the math was very impromptu and simple and that I am in no way an expert in finance.
However, as an outsider, the cash situation is worrisome. I was merely trying to point that out. I should have been more specific. Thanks for clearing things up.