The more money they lose, the higher the stock price goes.  Explain it to me, somebody, please.

Public staffing company On Assignment issued a positive forecast for 1Q2011, and I guess that’s enough for its stock price to continue an upward trend that started last May.

I looked high and low for good news about the company whose revenues have dropped like a rock during the recent downturn.  It’s true that the company reported only a small loss in the recent fiscal year, but a closer look at its balance sheet puts that positive spin in question.


Particularly troubling there is a mysteriously large value in an account called “Goodwill”.  $214 million to be exact according to the statement on Yahoo! of which a mere $15 million was declared impaired in 2010.  How can that be?   How can a company that clearly has been downsizing faster than Blockbuster declare that its acquisitions from years ago still constitute a value of that magnitude.

Maybe accounting standards allow for it, but you’d have trouble convincing me that those acquisitions are still worth anything north of say zero which would mean that the company has actually been losing $50 million or more per year since the downturn began.

Past disasters with acquisitions haven’t lightened On Assignment’s appetite, however.  CEO Peter Dameris is quoted in a recent BusinessWire press release as saying that “…we continue to see good acquisition opportunities that can complement our organic growth. Last month, we executed a letter of intent to acquire one of the largest privately owned clinical staffing firms in Western Europe.”

Hmm, what organic growth is he talking about?  The increase in the most recent quarter?  Certainly not the decrease of almost 33% from 2008 to 2009. 

On Assignment does have one defender, commandor58, who commented on its stock bbs that:

“ASGN has made two accretive acquisitions this year-yet the market doesn't care. Temp employment is up a greater % than employment in general-yet the market doesn't care. White collar talent is still in short supply-yet the market doesn't care. At some point in time, the market will care as ASGN, along with many other staffing stocks will rise a substantial %. 

Over the course of many CCs that I have listened to this year, many companies are saying that corp American cut too much in 2009. As a consequence, companies are choosing to hire temp staff vs permanent employees. High valued added white collar worker staffing firms should benefit the most. I bought some ASGN today and like KFRC as well.”

Whatever. Maybe commander58 knows something I don’t. In any case, investors like these kinds of losses, because On Assignment is far from unique in sporting this rising stock with large loss combo:


Like I said, explain it to me somebody, please.

Tags: Staffing Companies, Industry, Goodwill, Investors, Losses, Peter Dameris