Thread regarding SAS Institute layoffs

No CEO decides, after 50 years, that what's missing from his life is quarterly reports to Wall Street and a Board of Directors. They might sell it all -- but at this late date, they have no reason to sell a minority stake.

Also, Broadcom or private equity need majority control, to slash costs to maximize profits. If they don't have control, they won't buy.

I guess there might be someone somewhere wanting to buy a minority interest in a declining revenue stream. But if that person exists -- I've got some stuff I'd like to sell them 😉.

“The endgame is the same, whether by IPO or private acquisition. Once SAS IPOs, anyone can acquire it on the open market.”

Slight modification: anyone can acquire the available amount of SAS equity on the open market. If SAS does go through with an IPO (a huge “if”) then I don’t imagine anything approaching a majority share will be available. That is, unless the IPO happens after the demise of at least one of the two current owners (especially the taller of the two). Or am I missing something?

The endgame is the same, whether by IPO or private acquisition. Once SAS IPOs, anyone can acquire it on the open market.

The likely buyers are private equity, or companies like Broadcom. Such companies have long experience managing declining revenue streams. It’s part of their business model to estimate the rate of decline, identify costs to cut, and place a value on that revenue stream that ensures a profit.

Such companies are not white knights; they’re more like rollups. Disney invested in Epic expecting growth. The buyer of SAS will not have that expectation.

@8oxw+1qQyP4lP “ SAS will not IPO. It will be acquired. Period.”

Oh well if you put a Period after it that must make it so.

You don’t know what you don’t know. Period.

Disney and Epic Games have an equity deal where Disney invests $1.5 Billion in Epic Games. I wonder who will be the white knight to SAS...who will buy or invest in SAS.

SAS will not IPO. It will be acquired. Period.

@psk+1qQyP4lP

“This feels like a clear step towards a sale, not IPO…”

It helps either way. A private sale would be easier for the owners. But if no one offers an acceptable price, an IPO brings the best price the market will bear. And after an IPO, anyone can buy SAS on the open market.

Some people believe that SAS will only IPO a minority stake. But no CEO decides, after 50 years, that what's missing from his life is quarterly reports to Wall Street and a Board of Directors 😉. Also, nobody buys a declining revenue stream, unless they can buy a controlling interest to ensure that they profit.

Either way, the buyer will find JMP, Innovation Air, Kamakura, Teragram, and Boemska in more-or-less clearly separated parts. For either an IPO or private sale, that flexibility makes the purchase more attractive.

Before working at SAS, I worked at other large companies. Each department I worked in had an annual budget, and if activities or services were needed from other internal departments, the costs of those services were billed back to the department through an internal accounting system. These companies also had internal audit teams ensuring that departments were using the budgeted resources appropriately.

In all my time working at SAS, I'd never heard of such a system being used. That's not to say there wasn't one, I'd just never heard of it. I also never saw any concern about budgets, efficiencies, or audits within departments. It was odd, and it stood out to me.

That being said, I would be quite surprised if internal resources and costs were allocated and tied to deals. Maybe it happens. It's just odd that I've heard about those systems in place at other companies, but never heard about it at SAS.

"I have noticed several trips in the last year to Vail, Kona, the Bahamas, and Costa Rica". I wonder if they can write off those trips as business if they give out enough SAS shirts and other swag to the natives?

@1pva+1qQyP4lP Nice try truncating words off the beginning of a sentence just to fit the nonsensical point you wanted so very desperately to make.

“ In other words, qualified hope that accurate cost accounting took place — NOT a statement of fact that it did”

I think he/she made that pretty clear in their full sentence. But thanks for changing the context and then coming back again to assert the very thing the said.

And your ramblings are NOT a statement of fact that they don’t have accurate cost accounting.

SAS (and anyone of significance) can get a waiver from the FAA to prevent tracking of their planes on most public websites, like FlightAware or Flightradar24. However ADSB Exchange allows tracking of 'hidden' planes. They don't fly often, definitely not enough to justify 4 of these planes, but is interesting to keep tabs on them. I have noticed several trips in the last year to Vail, Kona, the Bahamas, and Costa Rica. The BBJ dropped JP and company off in Pune earlier this week.

Anyways search ADSB exchange by tail number to see flight history for the planes.
Dassault 2000, N7600G: https://globe.adsbexchange.com/?icao=aa43e7
Dassault 900, N7600S: https://globe.adsbexchange.com/?icao=aa43f1
Dassault 900, N7600P: https://globe.adsbexchange.com/?icao=aa43ee
Boeing 737 BBJ, N7600K: https://globe.adsbexchange.com/?icao=aa43ea

@aaf+1qQyP4lP

My exact words begin with “In all cases, hopefully very accurate cost accounting was done ….”

In other words, qualified hope that accurate cost accounting took place — NOT a statement of fact that it did

“ very accurate cost accounting was done to demonstrate if the elapsed time efficiencies and travel cost offsets were recouped based on the size of deals“
Are you sure you worked at SAS in the last 30 years? No, they historically have never tracked any costs associated with specific deals.
Also, I know for a fact that sales people used/abused access to the planes for the shuttle flights to/from DC and NYC for years. AEs used them for personal reasons all the time, including just to sit beside PH, GB, etc when they would be on the plane. Pure latter climbing, not deals.
Also, the planes costs $ks per hour to operate, not to mention the grounds fees, insurance, pilot salaries, etc. No cost accounting method could possibly prove the value of the planes. Just call the intent of the planes what it is: executive convenience… and sometimes pampering. If that’s how the company wants to spend profits, fine. Who cares. But, don’t pretend it’s driving substantial value for the company’s bottom line.
Fun anecdote:
A certain former Chief Sales Officer used to use the jet just to fly down to HQ, from Canada, every week. He stayed at the Umstead all week, and flew back. Value add? Well, he got fired after a few years of wasting untold amounts on that scheme.

Archive of article...

https://archive.is/pxRQp

… some of this is recouped …

For the record, Heath does the PR for SAS, she is not an executive. You could not pay me to do that job as I am not good at 'Spin'. She holds her nose quite well to handle the press given what she has to work with. She drinks the Koolaid because she is paid to do so.

@qwg+1qQyP4lP

In addition to greatly reducing elapsed time travel overhead, the Jets project a certain status, especially if a group of executive mucky mucks are dispatched to an important customer or partner engagement. As already pointed out, the planes (not to mention their principal occupants) are not only expensive to acquire, but even more so to maintain and fuel. This is recouped by not paying commercial or charter airlines, but it’s still very significant!

It’s doubtful if Shannon Heath or other corporate communications personnel spend much time on these jets. In my tenure at SAS They were mostly used to shuttle customer facing VPs/Senior Director types around, as a shuttle for long sales cycles for big ticket, deals that required weekly, customer meetings, and places, like DC and NYC, and to the West Coast during the building of partnerships with Microsoft, etc. of course, these planes are constantly busy during major SAS conference times.

I understand JMP used them quite a bit as well.

In all cases, hopefully very accurate cost accounting was done to demonstrate if the elapsed time efficiencies and travel cost offsets were recouped based on the size of deals having these planes helped to land. From where I sit, the current and future operational model of SAS must radically change. The cost of selling software must be reduced dramatically while the quality and usability of the delivered product substantially increases.

The fact that they have transferred the hanger and planes to their own LLC is going to make a little difference if the status quo continues.

This feels like a clear step towards a sale, not IPO, to me. I have no basis for this except the feels ;)

Thanks for posting this. It's another confirmation of preparations for an IPO or sale.

If there's a prize for irony in corporate names, whoever thought up "Innovation Air" should win it 😂!

Why would SAS own 4 jets? Wouldn't 1 or 2 max be sufficient? What a waste to have 2 extra planes.

The cost will still be paid by SAS until they decide to get rid of it during IPO/M&A activities. So, shuttling the pampered execs like Heath, who add zero value, will continue to weigh on the company finances for the foreseeable future. And they will continue to lay off R&D staff to make up for the wasteful spending and poor sales. Let the death march continue.

Heath, in an email, said M&A is not on the table, echoing statements Goodnight made three years ago that SAS is "not up for sale."

Haha, what utter bullsh-t!
Another sycophant gaslighting again.

Makes sense to me.

These aircraft are costly assets with expensive maintenance. An article in the Washington Post today reports that Taylor Swift's private jet is a Dassault Falcon 900.

"Swift’s Dassault Falcon 900 typically sells for about $29 million, according to an estimate from the private jet brokerage Guardian Jet. ..... The annual cost of operating Swift’s Falcon 900 jet is about $13.9 million per year, according to Guardian Jet."

That's for her 1 jet. SAS has 3 Dassault Falcon 900s, plus the Boeing.