The English language is a funny one. We've got all sorts of expressions that don't necessarily mean what you'd think they do. I'm not talking about oxymoronic phrases like "military intelligence" or "jumbo shrimp" here, either.
Rather, I'm referring more to single words like "inflammable," "irregardless," or "unique" -- which in contrast to their clear dictionary meanings have mutated in recent years into their near (or complete) opposites and are now commonly used to convey the concepts of "flammable," "regardless," and "interesting-but-hardly-unique."
Or, more relevant to today's column, the verb "to reiterate." It's supposed to mean "to say again." But as used by the PR department at TransActTechnologies (NASDAQ:TACT), it now appears to mean "to change the facts so that they appear to yield the outcome we originally promised."
Back in its August Q2 2005 earnings release, former Motley Fool Hidden Gems pick (sold in March of last year) TransAct predicted that Q3 2005 would bring revenues coming in somewhere between $14.5 million and $15.5 million and profits per diluted share in the range of $0.06 to $0.08. That's no longer the case, but you wouldn't know it to hear management speak.
Yesterday, TransAct issued a press release that "reiterated its third-quarter guidance for net income in the range of $0.06 to $0.08 per diluted share on revenue in the $14.0 million range." Which is noteworthy for two reasons. First, clearly, promising $14 million in sales one month after promising sales that could reach 10% over $14 million is not "reiterating." Second, while $0.06 to $0.08 per diluted share was promised both in yesterday's release and one month ago, the method of calculating that result has morphed over the intervening 33 days.
Since TransAct was first authorized in March to begin repurchasing its shares, it bought back 122,000 shares in Q2 and, as revealed yesterday, 409,000 in total. The 287,000-share difference between those numbers will therefore be subtracted from the number of shares among which TransAct's ultimate Q3 profits will be divided.
Now, I don't necessarily have a quarrel with the buybacks per se. If TransAct's management feels that they were the best way to spend $2.2 million of the company's $4.7 million cash pile, maybe it was. Next quarter, however, shareholders should remember that the reduced share count will inflate profits per share somewhat compared with the second quarter. That will give the appearance that TransAct didn't overpromise in August, only to underdeliver three months later.
Where else have we seen this new definition of "reiterate" lately?
For further Foolish coverage of TransAct, check out:
Fool contributor Rich Smith has no position in TransAct Technologies.
