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No. of Recommendations: 8
I think a primary reason why so many people on this board appear apathetic about GT's poor performance is that they bought it as a Fool Four stock and know very little about the company.

Until recently that included me, and I wasn't in a position to comment with anything more incisive than "GT sucks!" But I looked at the last two years of quarterly filings and the two annual reports before that, just as I would any prospective stock. And you know what? GT really does suck, and it's easy to see why.

Unless GT blows away their previous quarters' performances, total 1999 revenue will be the lowest since at least 1994 (that's as far back as I looked). Mull that over. In an era of unprecedented growth, GT's revenue has been flat or declining for at least five years. Meanwhile, GT has done nothing to decrease costs during this period; or, if they have, their efforts have been unsatisfactory.

By my analysis, the financials are in the worst shape ever as of Sep-99. Cost of Goods Sold, which had hovered between 75-77%, is now a staggering 84%. Accounts Receivable turnover has risen to 72 days to collect compared to 53-55 days in years past. Inventory turnover has decreased slightly. The ratio of cash to LT debt has never been great, but it's fallen from 0.31 in 1997 to 0.14 today. LT debt is about double what is was in 1997, and the revenue stream that will pay off this debt and increase cash flow is nowhere to be found, unless Gibari's vague statements about "consolidation" are an unforeseen godsend.

During 1996-1999, the Fool Flow ratio has hovered between 1.23 and 1.42, which is actually pretty solid for an old world, heavy industrial company such as GT. It's 1.23 as of Sep-99, the lowest ever, but GT has taken on a lot of short-term liabilities with their recent acquisitions. I wouldn't attribute the drop in Flow to efficient management.

Frankly, I'm surprised the stock price held up as long as it did. I'm no valuation expert (I bought GT, didn't I?), but it looks a lot more like a $20 stock than a $60 stock. The current financial situation has been building up for several years, and there doesn't appear to be a short-term solution.

The $23.25-Per-Share Question is: Can existing management formulate and enact a solution?
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