Kelby talks about the filings on the rate issue and note that everyone except the dominant provider agrees that the first two tiers should be expanded. The dominant provider, however, took out a debt to fund shareholder payments and apparently wants someone else to pick up the tab. Links to Purple and other filings are below.
CSDVRS
RID
Sorenson
Consumer Groups
I disgree with that sorenson should quit greed of money…
Sorenson needs to swallow the debt on their own. They have the money for it already and they can use it to pay off the debt than their exec’s homes with 5 car garages.
I don’t agree with how Sorenson did with money. If they borrowed money, then they obligated to pay back what they owed. I realized that I disagree how Sorenson’s processes in fund for service. I am glad that Purple are doing well.
DEFINITELY NO! Sorenson ought to be pretty cautious with their expenditure spendings.
I NEVER get any Sorenson product at all. I do not see why the Sorenson have to borrow $735 million dollars for the sake of investors.
How and what the Sorenson need $735 million dollars for??? Sorenson have not issue any public announcements what the Sorenson will do with $735 million dollars.
Sorenson recently laid off the deaf installers and cutted terps’ hours. Does the fat cats at the upper management at the Sorenson tighten their belts yet? I do not think so!
Robert L. Mason (RLM)
No. FCC should not be expected to pay Sorenson’s debt. It makes absolutely no sense at all. Bailouts from the federal government needs to stop now.
Not that I give a hoot about Sorenson but something you said, Kelby, has thrown me for a loop and I wonder if you can expand on that? You said Sorenson borrowed money for profit. Sounds like an oxymoron on the face of to me so could you please enlighten me? Thanks
Sorenson made their bed now they need to lie in it. They made the choice and made the assumption they would continue to gather big bucks. Honestly I do not feel bad for Sorenson – it is their problem and they have to deal with it. I have not had a Sorenson product in the last 4 years and I have always promoted other people to support the smaller VRS aka Purple, SnapVRS, ZVRS and so forth.
It wouldn’t matter anyway because Purple got saved by FCC from their bankrupty as well… So shut it!
@Tousi…
I can show you an article from Wall Street Journal which was posted on my facebook, here is the Direct URL for that..
http://bit.ly/bPO6JS
Shame on you, Kelby, for spreading vague information. You’ve only given part of the facts and failed to mention that Sorenson had plenty of evidence, data, and information to support their suggested rate of 5.95. I’ve seen them. If you havent, and are a major part of Purple, something’s wrong. I’m a mere customer.
RLM: Sorenson has NOT laid off anyone. They have never laid off anyone since the company started. Interpreter hours have not been cut. Sorenson is as busy as ever and expanding, even with all of this uncertainty.
Kirk got it right. The FCC is already helping cover Purple’s debts to its investors and allowing Purple to operate despite owing the FCC itself almost $20 million!
@Spencer..
if you have seen the evidence, data and information. PLEASE share them with us so we all can see your perspective? From what I have seen during my research… It shows differently!
There is information all over the internet. Sorenson’s website has information, The FCC website has information, TDI has information, ETC ETC ETC. Look and read everything and you’ll start to see the truth.
Any organization and any person should pay off debt. Borrow money for paying dividends, and then ask FCC to cover debt is an arrogant, unbelievable behavior. that’s business practice a la Wall Street.
If a business makes a bad move, that business needs to be held accountable. Unlike the Wall Street corporations, Sorenson is expendable without jeopardizing the USA economy. For a long time, Sorenson had engaged in unfair business practices, maintaining a monopoly and thwarting the growth of other VRS companies. Sorenson had exploited the Deaf community repeatedly, using scare tactics and threats to manipulate them, and limiting the customers their rights to choose their VRS servers.
We cannot have a government to bail out every business who made a bad financial move. If Sorensen did it, it’s the company’s responsible to clean up its mess. For a long period, it had amassed a big fortune through its VRS business. It became overconfident and overextended itself due to pure greed to generate more money. It was an unnecessary gamble. A big oops as it turned out the gamble was a big mistake. Don’t cry and run to FCC whom the company had used to establish up a monopoly, which is still against the law the last time I checked.
If you’d like further confirmation, check out this link for yourself.
https://www.lcdcomps.com/lcd/f/article.html?rid=800&aid=12318104
It specifically states that the proceeds from this $735 million were earmarked to pay down second-lien term debt and a PIK holdco loan, as well as a fund a dividend to the sponsor, GTCR Golder Rauner.
Additionally, it also states that the news of the fact that this company was being leveraged for a special payment is not being well received in Washington, according to sources.
I’d imagine that this also refers to the FCC when they say “Washington”.
Based on working in the VRS industry in the past, I calculated Sorenson’s annual revenue to be roughly 600 million a year (750M industry*80% mkt share). I am assuming that Sorenson’s current profit margin is about 33% before taxes. This means Sorenson profits abou 120 million a year after taxes (600M*33% then *60% for taxes) and they will have to pay back about 150M in debt service. Not looking good. It tells me that their private investors told Sorenson that it was time to pay the piper before the rates were likely to be cut. When a company is not profitable, payroll is ţhe first to go. You can bet that the Interpreters won’t be let go because they generate most of the revenue. If I were a Sorenson installer, I would update my resume.
Obviously I agree that FCC should not have to pay Sorenson’s debt. It is sheer nerve on the part of Sorenson to expect FCC to do that.
Additionally I am also disturbed and dismayed by the fact that Sorenson enjoys a 85% share of the market. I don’t understand why the government isn’t already taking steps to break up Sorenson.
MZ. Look up the definition of a monopoly according to the government. Sorenson does not meet any of the criteria listed. I’m getting pretty sick of hearing Sorenson labelled as a monopoly. they are a smart business, not a monopoly.
It may be true about Sorenson, but….PURPLE laid off a lot of DEAF people than other relay service~ Sooo why should we continue using PURPLE?? Sorenson hasn’t yet laid off anyone, but yet let’s patronize those smaller VRS companies~
Spencer,
I do not believe Sorenson’s web site at all because AFTER seeing what I found on the internet. I know Sorenson is LYING to the public period!
What I found will be disclosed very soon! but I can honestly say this.. Sorenson has been telling their investors that they make about $240 million dollars in profit! Thats about 45% profit margin WAYYYY alot more than FCC allows of 11.25% profit !
Therefore Sorenson’s words means NOTHING to me…
Jon
I haven’t seen any evidence of this, Jon. Where is this information you are speaking of?
Kelby,
Excuse my spontaneous reaction on Twitter. Sorenson DO NOT want any competition PERIOD! According to your vlog, Sorenson wants a flat of $5.95 per minute without any explanation. The truth is that Sorenson is falling into deep debt after NECA cut reimbursement rates and that forced them to borrow $735 million to pay the dividend to its owners. What more do we need to know? No, FCC shall not cover their debt and Sorenson needs to clean up their “mess” first.
I think it would at least be a fair question to ask Sorenson to give us all a full breakdown of every penny involved with that 5.95 rate that they want.
Spencer…..
http://fjallfoss.fcc.gov/ecfs/document/view?id=7020492012
http://fjallfoss.fcc.gov/ecfs/document/view?id=7020492013
Jon–
The first document from John Ziev is not valid–what he wrote is his opinion and his analysis, not facts.
The second document is more factual, but I still dont’ see anywhere where it says Sorenson says they make a 240 million dollar PROFIT.
Spencer….
Obviously you cant read…..Bottom of page 1 of the 2nd document, It clearly says DROP FROM 240M…………
“However, more bearish estimates suggest TTM EBITDA could drop from USD 240m to USD 100m if the rate cut holds, as previously reported. Assuming interest and capex continue to run at USD 130m, the company could start to burn cash quickly, as reported. “
Oh yeah…. Glossary lesson time for you Spencer..
EBITDA
Earnings before interest, tax, depreciation and amortization. (in other words PROFIT)
Trailing Twelve Months – TTM Mean?
The timeframe of the past twelve months (the past year) used for reporting financial figures.
To Sunshine: You mention Sorenson has never laid off anyone, if I was you i go double check that information. I know three people who were laid off this year from Sorenson, their reason for lay, structure change as in getting prepared for the FCC cut rate. At the time they did this quietly and slowly.
Now with the rate possbility being cut, Sorenson has hit panic mode button, of course they not going to lay off anyone now, they need every employee help them get the words out. Sorenson wants to do a lay off according to my friend who works for Sorenson, but affaid to do so due to the social media, Deaf community and how they been bashed in the media.
So instead plan to do this all at once, lay off bunch of employees and blame FCC for it at the end of the day. Now with Purple, yes it was ugly painful lay offs for some of them but it was a correct thing to do for the company move forward to do business for the long run. Keep in mind, Purple is not only company in USA laying off people, it happening all over USA and Purple is not different. But I can see they are bouncing back slowly and growing again.
As for me, I use services that provide diversity in their company, quite frankly Purple Communication seems to be only company that has diversity across board at Purple compare to others VRS provider. Am angry because we live in the 21st century and more VRS should have more diversity race in VRS company.
I challenge other VRS to step up on the plate and hire more diversity in race. I honestly can not picture Zvrs, Sorenson and Convo vrs hiring Mexican, Black or Chinese person and having an important role in the company. Reason why am saying this, look at their track record, their history speaks for itself and we live in a time where diversity is what makes this country a great place to live. Having said that, please prove me wrong, go HIRE a CEO who is Deaf and not white then I will shut my mouth until then I am not. Better yet, you will win my service!
Keep it up Purple!! As long you embrace diversity, am with you all the way. Continue to hire diversity people because this will set you apart from other VRS and certainly will help you grow in the long run.
Hi whom it may concern,
I fully support/agreed sorenson to paid its debts (725 millions).they provided free videophones to deaf users for free. Think about how much deaf people residues in united states? Millions of deaf people lived in america. How can sorenson keep it up with their deaf consumers if they provided free videophones. I do believe it costs sorenson some millions dollars for providing free videophones, paid interpteters and paid installers. Interpteters and installers are not cheap either.videophones are not cheap device.think about the computer’s costs is not cheap either.sorenson was trying to improve the video quality, service, etc in videophone in each year for deaf users. facebook, dell, hp, mac, and sony ceo are trying to improve their service to their consumers. Sorenson don’t earn any money from deaf consumers.how can sorenson afford to their interpteters, installers and videophones? sorenson dont get profit from deaf users. sorenson is trying to cover the debts from interpteters,Installers’s salary and videophones’s expense.I dont believe that sorenson is ripping FCC off and sorenson is trying to pay its debt off to continue service for deaf users.