Monday, August 25, 2008

Wireless Ronin (RNIN) calls in bad debt, is left with a big pile of hardware

I hate to say I told you so, but ... well, I told you so.

While Wireless Ronin has yet to restate its past years' earnings based on the decision by its biggest customer -- start-up company NewSight Corp -- to throw in the towel and hand over its assets since it hasn't been able to pay, that may still come to pass. Right now, the company has simply called in the note that it has been allowing NewSight to hold. Instead of the $2.4 million that RNIN originally claimed to have gotten from the company, it will instead get a load of quickly depreciating hardware that NewSight was busily installing into Meijer stores for their in-store TV network.

I know, I know, technically they could just write the whole thing off as a bad debt, and perhaps that's what they'll do. But seriously, it's $2.4 million of bad debt, which is an enormous chunk of their stated revenues since they went public. I don't know if their investors will let them off the hook that easily. At the very least, I'd expect a management change.

As for the Mejier network, Ronin has a few options. They could try to sell the hardware and come away with some cash (not that they need it after a few rounds of very successful fundraising on the public markets). They could try and contract out the network management to a new company, essentially replacing NewSight's role while maintaining control over it. Or, I suppose, they could try to run the network themselves, which would be a big repositioning from them (it's hard to sell hardware, software and services when you're competing with all of your clients), but might actually be the best possibility for both short-term revenues and long-term growth that the company has.

Granted, the rumors floating around that Meijer is looking for a new provider can't be helping them much on that side of things.

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