You don't necessarily need to stay away from PPL, but it is a high risk stock now, that requires much patience, and some luck.
The problem was largely brought about by their disastrous takeover of Cohort, and the exorbitant price they paid.
They have now effectively written down all the losses from Cohort, which was probably more than $20 million, and as a result, the company founder fell on his sword and retired. It's interesting to see the Chairman still in place though.
They bought in Nic as CEO, and it looks like they have been doing some rationalizing of the company, buy cutting the business units that are making no money, buy letting people go, by writing down Cohort losses, and trimming down all other parts of the business.
You can see the plan, effectively to go back to square one, and be a much leaner company holding just those business units that are more profitable.
Profits will shrink, but so will costs.
When they have stripped it back to the basics again, then they can re-start to build again (if they wish). We don't know how long this restructure is going to take though, but it won't be rapid.
It won't be a quick fix, and it may never have the potential to live up to what it could have been, but it may enable the company to survive and (slowly) progress. Either way, you will probably need many years of patience if you intend to invest in this one, but it may be rewarded, however there are many better investments on the ASX at the moment.
Let's see how they go, and wish them the best of luck.
Gw
PPL Price at posting:
7.3¢ Sentiment: None Disclosure: Held
