Flexigroup who for more than a decade has had a financial arrangement with Harvey Norman is on the skids with their shares crashing from over $3.00 to 41 cents last week. Some analysts have said that the stock will go as low as 20c while others are questioning the viability of Flexigroup going forward.

The Company who via Harvey Norman sold overpriced finance packages to buyers of consumer technology products including flat panel display, notebooks and sound systems is now facing the possibility of further pain as the market for CE products slows.

In March several CE distributors saw sales slump up to 30%. Sales of flat panel display TV's were down 20%. This is not good news for Flexigroup who are banking on the consumer technology market growing not retracting.

When Flexigroup was first floated in 2006 the shares hit a high of $2.00. Profits soared as consumers were talked into 3 and 4 year interest free packages that had interest rates as high as 18% if any one missed a payment. Now the Company is forecasting profits as low as 6% compared to 29% at their peak. On Friday the shares had come back to 0.64c.
At its peak the Company who has a reputation for being arrogant was valued at $700 million which was 25 times the expected profits is now wallowing at a market cap of $139 million. 
A potential victim is former Harvey Norman Finance Director John Skippen. A director of Flexigroup Skippen late last year purchased 100,000 shares in the Company at 86c a share and when these crashed to 60c Skippen bought another 100,000 shares only to see them fall to last week's price of 41c a share. 
On Friday Paradice Investment Management sold 2,000,000 shares for a consideration of $855,533 according to an announcement to the ASX.
Now it appears that "Mum" is the word at Flexigroup as Company principles refuse to answer media questions. Managing director John Delano, 48, the former boss of Avis Australia and former Qantas director and now Chairman of Flexigroup Margaret Jackson have refused to go on record about problems at the Company. At one stage she had over $6 million dollars worth of Flexigroup shares. Today those shares are worth $1.6 million.
Andrew Abercrombie, who sold Flexi Rent into Flexigroup, and who now sits on the board as a non-executive director, is also a victim of the crash. He bought 1.5 million shares at $2.35 in early December 07.
According to the Age newspaper Flexigroup told the market in December that it did not rely on global capital markets to source any of its funding requirements and that committed, undrawn facilities were expected to be sufficient to cover the projected net increase in borrowings until June next year.
The Age went on to report that Goldman Sachs, one of the brokers that floated the company, reckons it is a "buy" and noted that the market had moved away from fundamental analysis and "is effectively pricing the closure of the business". The broker said such a scenario was "near-impossible". Having a bit each way, when the stock was 46¢, the broker said that it could trade down to 20¢ "before returning to over $1".