[BobC]

Jamie,

I don't personally know you or Ed Beachley but, you've accused him of basically being a slanderer and a liar and having some kind of agenda against PSA. I almost never post on this forum but, do follow and read a lot of the threads. You've accused him of making untrue statements and of specifically trying to tell people PSA is going out of business. That is not the case from what I can see. He titled his thread regarding PSA going out of business with a question mark (?) at the end. In other words, he was bringing to the attention of the people on this board information he had seen about PSA and coupled that with his own perceptions of how PSA prices seemed to trending against cards from other grading companies and was making some observations and seeing what others thought and to get feedback. Truth be told, his points and observations are all very valid. He was basically quoting information from PSA's parent company's financial statements. They are a publicly traded company that is required by the SEC to make their financial statements and certain records and data available for public inspection. Unless you are suggesting he made up the figures and such that he was quoting, the parties responsible for putting forth false statements and mistruths would be PSA, their parent company, and their auditors.

As I already said, I don't know Ed, I really don't care about PSA, SGC or any other grading companies, I have no financial interest in any of them and actually, I don't really care for the slabbing of cards. What I do know is I've been a CPA in practice for 30 years and have done my fair share of financial statements and been involved in enough business valuations and merger and acquisition deals to understand and appreciate exactly what Ed was saying. I haven't independently verified his comments and figures but, assuming he is accurately quoting information put out by PSA themselves regarding their financial history and statements, it is painting a very distrurbing picture for them and an experienced financial person would be foolish to not take heed of that information if they were looking into the business.

Ed noted the continuous recent decline in monthly subbmissions to PSA, along with the fact that the card grading division itself has been consistently losing money for quite some time now. He agreed with your observation that the company did make a profit in a recent quarter but, as he then pointed out, that profit came from another division, coin grading I believe. That means the card grading division of PSA was still losing money. The owners of PSA are not into it for the hobby. They're business people looking only to make a profit. How much longer do you think they'll continue to operate a division at a loss before they make major changes, sell it or just close it up?The fact that the parent company, as reported by Ed, has already sold off some other divisions means that PSA's share of the corporate overhead is now going to be higher than it previously was, making it even harder to be profitable going forward. Now, when Ed speculated on their ability to stay in business, I don't think he referred solely to the option of them closing up and going away, akin to what transpired with GAI. I believe he was also inferring that the PSA division may be sold to someone else or spun off on their own. Still, given their individual division earnings and profit/loss history, it could be tough for someone to take them over and suddenly make them profitable. Also, a change of ownership could significantly change the way they do business, and possibly not to the liking of the majority of their current customers. No one knows for certain but, why wouldn't this germaine, factual information possibly be of importance to some on this board.

You said they had something like $10 million dollars in the bank and they recently turned a profit on their consolidated corporate financials. You then asked what accountant ever heard of a company like that going under. Hmmm, I don't know, ever hear of Enron (and I think they had a lot more than just $10 million in the bank and a $700K profit for a one quarter)??? Now, where did the $10 million in cash on hand come from? Was it from invested capital, retained earnings from prior years or, maybe, proceeds from debt? Regardless, given the history of the company generating mostly consistent losses (the recent profitable quarter appearing to be the exception and not the rule), why would a business owner continue it and spend all the money they had till they ran out? That is not a good business decision. As with a lot of my clients that I talk with and advise in this current economic crisis, you try to assess the current situation, begin cutting whatever costs you can and try to maximize your revenue and profitablility. You also have to be realistic and look at your revenue sources and be objective in determining if there is a true ability to turn a company around and then sustain that business/growth. If not, the smartest move is to cut your losses and either sell or close the business as quickly and efficiently as possible (unless you're a bank, insurance company or automotive maker and then you just wait for the government to bail you out). Face it, in the current economic market, spending money to slab cards, coins, stamps and so on is not going to be a top priority on a majority of people's to do lists. Further, as you've stated, PSA has at least in the past appeared to be considered the premier company to have vintage baseball cards slabbed with. Well, given the fact that they don't print new T-206s or other vintage cards anymore, there's a finite population of them to be slabbed out there and as time goes by, there will be less and less vintage cards to be slabbed. Of course there is the new shiny stuff but, I've always heard that Beckett seems to be the preferred medium to slab those cards in, not PSA or SGC. And in any event, I think that with the economy being what it is, and the bashing that all the investors/speculators who bought 1980's and 1990's wax and cards in hopes of making big profits that didn't materialize have experienced, I don't anticipate the level of slabbing new cards to continue at such a high level anyway. All in all, this doesn't bode well for PSA being able to generate additional revenue. Heck, they already tried the half-grade bump trick to generate more submissions and even then, it didn't apparently help them to get profitable. What's next for them, to go to a 100 point scale like SGC and try to get submissions in to bump from a 6.5 to a 66 or 67 grade? That gimmick was a one trick pony that they've already played.

If they do try to cut costs, that probably means nothing good for the hobby. Fewer people and services likely means longer delays in getting items back, probably less emphasis on accuracy and increased possibilities of altered, trimmed or unauthentic items getting slabbed. All things that are not good. As you even pointed out yourself, you had a concern about the one poster that complained about not getting explanations from PSA as to why his submitted cards didn't grade as he thought they would and when he returned them, PSA bumped him up a grade on two of the cards. I agree it is terrible but, given the economy and a business fighting for every dollar and customer it can get, does it surprise you? And what makes you think it is an isolated incident that won't be repeated more and more as we continue through the current financial crisis. And that is not to say the same thing doesn't/can't happen at SGC. Face it, they are competitors, not friends. Don't think for an instance they really care one bit about you or I. I've seen enough business owners faced with losing their companies and I am shocked to the lengths and extent that some of them are willing to go to just to get revenue, market share or merely to keep the company afloat. Just look at Bernie Madoff as a prime example of what someone can do to their so-called friends.

Jamie, you also bashed Ed for his attemp to provide facts and figures concerning his question of whether or not the trend in PSA slabbed cards garnering prices higher than comparable SGC slabbed cards was turning the other way. He didn't definitively state it as a fact. He merely presented some examples he thought would illustrate his theory and referred to other comments in threads he'd read on this forum. He acknowledged that the high-end PSA graded cards still seem to command the top prices but, as I think Barry Sloate pointed out in a later thread, that is likely due to the PSA registry guys throwing their testosterone (as well as their money) around and is not indicative of the vintage card market as a whole. Ed agreed with you basically but, when he picked an example that involved some recent non-sports card transactions to try to illustrate his point and question on whether PSA or SGC would generate better prices, and gave factual reults to support that premise, you then shot him down saying his example was some obscure issue and that the sample size was too small to be relevant. OK, but at least he presented some factual information and data. What did you present? Nothing, just some comments to try and diminish what he presented as immaterial and irrelevant. So why don't you tell us what would be relevant or material. Or better yet, why not present some factual data yourself to disprove what you think Ed is suggesting.

You also argued about Ed's points regarding the insider trading issues and the upcoming stock repurchase as not being indicative of a potential problem at PSA. Maybe and maybe not. You have to look at all the facts and issues, along with taking the state of the economy and business trends into consideration, before arriving at an opinion as to how a business may be doing. Ed's points are once again well taken. I agree with your comment that there are more than just insiders currently trading in the company's stock but, what I think Ed meant was that in looking at the reported insider transactions involving the parent company's stock, the majority of all the stock's recent activity has been with insider purchases. Since information on insider (ie: company officers, directors, major shareholder) trading activity in a company's stock is also required to be reported and made public record, the general public will often watch what those supposedly "in the know" are doing with their stock holdings to determine where the company's business may be headed. Obviously, if the officers and directors start dumping all their stock it panics the general shareholders and gets people thinking something is wrong and thereby normally weakens the stock price. Coming up with a stock repurchase plan may be one avenue whereby officers and directors who own significant interests in the company may be able to cash out some of their shares in the mandated buyback and thereby take some of their money off the table without selling their shares directly and possibly causing the stock price to drop lower than it is. Depending on what shares are bought back, this could also be a way to reduce shares owned by the general public, thereby solidifying the officers and directors control of the company and making it more difficult for an outside firm to come in and take them over. Also, taking the cash out of the company would make them less desirable to others as a takeover target too. Or, as Ed alluded to in a story or rumour he heard about how someone thought/said the breakup value of the entire enterprise was about $7.00/SH, this could be the insiders attempt to gain more control/share of the business just prior to a sell off, and hopefully a quick turnaround profit at about $2/SH. I agree, buying their stock now at about $4.90/SH when the likelihood of it quickly being redeemed by the company for $5.00/SH makes little sense. By the time you factor in transaction costs for your purchase you don't make anything. Which is exactly why a smart analyst/accountant would wonder what is going on and what do they have up their sleeves. Which is exactly what Ed was pointing out to everyone......something seems to be going on. Wall Street analysts do this for a living. Heck, you can turn Jim Cramer's Mad Money TV show on any night and hear him talking about this kind of stuff on all kinds of companies every day. So if he happened to talk about PSA and Collector's Universe on one of his shows and mentioned the same facts that Ed did, would you call the show and claim he was a disgruntled ex-employee with an axe to grind also?

Think about it, you accused Ed of putting forth false statements and mistruths and make an accusation that he has an agenda or is a former PSA employee done wrong, or that he had some other bad experience with them that now forces him to go after them in this manner. The only one I can see that is guilty of false statements and mistruths is you in the way you've attacked Ed.

The fact is, to my knowledge PSA is the only grading company that is publicly traded and therefore has its financial statements and results available for scrutiny. I'll bet you my last dollar that if we had been able to see GAI's financial statements and records leading up to their demise (assuming they were accurate and timely) it would pretty clear they were headed down a bad path. Now, if you were looking to get a card slabbed and had knowledge that GAI was in difficult financial straits, would you be as quick to send it to them knowing they may not last long? Probably not. And if you were contemplating sending something off to them just before they went under, wouldn't you have been appreciative of someone letting you know their financial position so you could make your own, better informed opinion, as to whether or not to submit a card to them? We don't have access to SGC data, or so I believe. Because we do have access to public records and data for PSA though, are you saying it's not fair to bring it up for people here to know unless it's favorable?

I have never sent any card to any company to be slabbed. Still, Ed's info and insights are exactly why I think people follow this forum and read these threads. Jamie, you are reading the wrong things into what he was reporting. How can more information, knowledge and facts (especially when most of it is public information) about a company that collectors on this forum use quite a bit be a bad thing? I'm not at all bashing PSA. In fact, for all any of us know, SGC could be in worse shape than that and collapsing next week. Jamie, I wish you well in your collecting efforts.

Bob Casmer