Hi guys, I have held this stock since 2008. I've held on through this downfall mainly because my position isn't that big but certainly wish I hadn't.
The thing I want to bring out is that many people look at this stock and say things like "It's bottoming out" but I'm questioning that logic. Here's why:
If you go look at the history of the stock you will see that around October of 2007, the stock was trading at 20. At the time I can remember that they issued new shares and the dilution caused the stock to drop into the 10 dollar range. It never got close to it's previous level.
As a contrast, look what happened during the crash in 2008; the stock dropped big time, but that was due to the general market crash, negative sentiment and people leaving equity for the safety of cash. It was indeed only a matter of time until the stock returned to it's prior level of around 10.
My point is that the broad market has not seen the type of drop that CRNT has had. In fact, the market has risen substantially while CRNT has dropped. For anyone paying attention, it's because once again, CRNT has decided to issue more shares thus diluting the value of the shares held by current holders of the stock.
I just don't see why we should be optimistic that the stock will have a comeback. We have seen dilution before and the decline seemed to be permanent or at least long term. The story of CRNT for a long time had been a story of growth but margins have turned miniscule and new deals have become far a few in between. Unless you think they are going to something spectacular with the money they bring in from the new issuance, what do we think will change to increase value? Will the fact that they have an inflow of capital mean they can charge more for the products in a competitive market? Will they use the money to decrease costs? Are they going to use the money to increase production (which only makes sense if costumers who want to order their products, can't because production can't keep up with demand)? I don't think so. Bottom line is that I don't have a clear picture of what the money from the issuance will do to increase value of the company. I did not read any filings or the financial statements in an attempt to find this out. If you know, please save me the trouble and let me know what you found.
As of now I see this stock staying in the 5.50 ballpark for at least a few years. I'm thinking of selling calls covered by the stock I own to make some money while the stock wallows in the 5.00-6.00 range.
Thanks for reading my analysis and replying with the kind of crap I expect from that fool on this board who spews garbage all day long.
Please explain what you mean when you said that "a shelf registration is not an equity issue". That sentence doesn't even make sense. Do you even know what a shelf registration means? It just means that you can register a single public offering of a basket of securities, i.e. stocks of different classes, bonds etc. while being allowed to issue any one or some of those classes of securities, or [and this is the important issue here] only a portion of one or some of the securities listed in the public offering. What this allows a company like CRNT to do, is to register once to be able to issue say for example a million shares of stock, but only actually issue half a million, and then some years later issue the other half million without registering the second half million shares as a new public offering since it was included in the original "shelf registration."
So guess what dude, you can bet your #$%$ that the second issuance IS, in fact an "equity issue." It's an "equity issue" the same exact way that a new registration for a public offering is an "equity issue." They BOTH dilute the current shareholders when the new shares are issued.
Maybe you should google the difference between the number of shares "authorized" and "issued."