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  • bobforaps bobforaps Jun 20, 2013 5:34 PM Flag

    There is a very small chance

    (and you would be taking a very high risk position if you believe it ) that Management was playing some high stakes poker with their public announcement i.e. "going to stop providing screens if they could not get better firm prices" and they would focus on their real estate. In simple terms that they were using this as a negotiating stance in dealing with the larger companies they serve. If true, it backfired on them (and us) and created a storm of lawsuit threats and a crash in the stock price. If their product were superior as the award they received in Q4 indicated perhaps this will end with a new and better, more reliable contract than what they appeared to have in 2012. Now they seem shell shocked and are clamming up so it is possible the share price will fall into the 4s. Like everything on this board, this is pure speculation.

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    • bobforaps,
      I had the same thought as you initially, but the problem came when after q1 the company stated in its subsequent press release that " the new purchase order (ending Sept 2013) does not alter the customer’s (JDI's) decision to eventually transfer its future orders to other suppliers with lower assembling charge."

      In essence, unless you believe this press release is not true, then the contract with JDI is over at some point in the near future. It is just a matter of time before the press release comes out. How much of this is baked into the pps at the minute, I can't really say. We know that Sharp is not contributing a large amount to the bottom line, so JDI is the main player at this point. Everything else is speculation.

      Sharp is almost bankrupt. JDI, at some point in the distant future, will also be bankrupt. Mark my words, the lesson here is that you do not want to be a slave to Poison Apple. You should appreciate that NTE has been able to survive for many years and, at times, pay hefty dividends. The challenge here will be if NTE can adapt...and I think they can. Just too much speculation at this point.

      I think there is a good company here with a great long term track record. I would hope that the company will not abandon the EMS business. That would truly be disappointing.

      Sentiment: Hold

    • bobforaps, I, being an ex supply chain guy, think what you said made sense. The kind of poker game you mentioned happens everyday in the world of procurement. I think, as you pointed out, the drop in share prices is an unintended consequent which the management didn't expect. I certainly didn't expect it.