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Velti plc Message Board

  • betasplen1 betasplen1 Mar 13, 2013 9:34 AM Flag

    Just read the CC transcript

    Thanks to Seeking Alpha for posting it. Ignoring the usual market reaction to a miss (unless you are AMZN), let's look at the long term view - as I believe this company has a very strong long term story.
    1) The revenue 'miss' is mainly because they voluntarily nixed high risk customers and didn't get some expected gravy revenue at the end of the quarter from some of their campaigns. If you back out the high DSO customers, who they are consciously walking away from, 2013 growth is still 40% on an apples-to-apples comparison.
    2) Being almost the end of 1Q, the CFO knows how this quarter went. There is one more quarter of negative FCF as they transition the business. Using conservative estimates on bad debt reserve and timing of obligations, Ross is confident (8 in a scale of 1 to 10) that they don't need to raise any money while waiting for the 3Q13 turnaround for the company in term of FCF and profits (which is only 4 months away). So much so, they are not even thinking of a Plan B - they have done all the stress testing required in the model. There will always be pain during a transition and they are deliberately walking away from high margin business for long term fiscal responsibility and clarity in growth projections. Wallstreet usually rewards this behavior, especially when the stock is already trading below 1 x revenue.
    3) About them not concentrating on smart phones? That is baloney. They are adjusting to what the market wants - US for example will be 85% smart phone focused.
    4) They are planning to wow investors from 2014 onwards and are being very conservative with 2013 guidance as wel. $40M FCF in 2014 and 40% growth thereafter? Wow! Market is usually forward looking when the stock is oversold like this and that will start happening in 3Q13 when they start seeing it.

    Bottomline, this would be range bound for a quarter or two and then rise quickly to $10-12 by early 2014.

    Sentiment: Buy

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    • good post

    • j.bentley2@btinternet.com j.bentley2 Mar 16, 2013 6:14 AM Flag

      The problem is the lack of faith in managements previous guidance as they have actively tried to push the s tock price up with statements that have come badly unstuck. TheCo is balanced bewteen redemption and bankruptcy and so you can lose your shirt totally in the next few months as who is going to put up money to buy it while their clients run away from a dying company and go to their competition. The brokers involved in this have all also got it very badly wrong and so are either liars themselves or have been lied to.

    • Great post Beta...its good to encourage with the facts; Of course, any thing can go wrong, but agree with your points, and think you did a good job of relaying the mains constructs of "why this is a good investment" at this level! Kudos!

    • Very nice and factual post. I read the CC transcript over twice and got the same basic takeaway from it but you summarized it perfectly! Glad to see higher education today still has benefits! LOL

      • 1 Reply to golongin2008
      • Thanks guys. I did have a typo here and there though :)! As long as you keep realistic goals, you will not be disappointed with buying here (or even in the $3s for that matter). I think this will have a hockey stick chart pattern once Wall street is convinced that Ross knows what he is talking about. It will take 6-9 months to pan out and patience is key.

    • Very precise summary Beta. I couldn't agree more from listening to the CC 2 times and reading the transcript myself. I am busy buying more and averaging down from entry point of $3.

      Sentiment: Strong Buy

    • Thanks again

    • Thanks a lot

    • you seemed to have left out any of the bad news. I would like this co to good as well but you have to look at the entire scope of things not just what you want to here. Actually listening to them speak gives a better view on things also

    • This stock has been oversold due to over reaction. Future hold promise and new CFO made it clear why he joined. Wish everyone would see the reason why certain things have been done by mgmt and why. Long term this co will emerge stronger and with 30 to 40% growth rates show me others even GOOG or FB or MSFT or IBM or BA or AMZN or NFLX isn't growing at such pace.

      Sentiment: Buy

    • I forgot to mention that the stock had already sold off since the CFO talked about the transition during investor day - from $5.50 to $3 prior to the ER. The news yesterday was just more details of what he already mentioned. Nothing new. Why the analysts did not lower their estimates after the investor day is more their fault, not management's. Actually, the stock has sold off from $8 to $3 on the same news if you go back to Nov whenthey decided to change directions. How many times do you pummel a stock for the same news? I think the shorts have gotten enough profits from this triple whammy and will be covering over the next few months as well. Even if overall revenues are flat this year (new business filling the void of older business) and capex and expenses are down sharply, they should earn at least 30-40 cents (non-GAAP) this year as well. A PEG of 0.20 is dirtier than dirt cheap.

      • 2 Replies to betasplen1
      • beta-thanks, always value your input. I thankfully cashed out before the crash will probably look to get in during this bloodbath here.

        One concern from the CC "As many of you know, a number of acquisition-related obligations become payable in Q1 and in early Q2. Our total payments due under these obligations include a $30.5 million payment to MIG, with $15.7 million of this amount payable in cash and the remaining $14.8 million payable in shares or cash at our election. We anticipate paying the $14.8 million in stock and are discussing the exact timing of payment for the cash payment due."

        Does this not mandate 14.8 million dollars in stock dilution (~10 5 at these levels) to pay this bill?

        thanks

      • Good points betasplen - i'd just add that if you want to search for $2 stocks that earned .39 in last FY, you get a sense that this will continue to creep up from here. the shorts have had a great run and good for them, but nibbling at these levels is common sense, based on your specifics and the prospects.

        Sentiment: Strong Buy

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