Valuation does NOT matter here at this point. Now that this is a sub 5 buck issue (penny stock) most institutions holding this junk will be forced to sell. With no buyers and institutional sellers (on top of panic retail sellers) OVTI will go below a buck in the next few months and then be de-listed from Nasdaq and become an OTC stock. Simply doesnt matter what its "worth" is, $5 or $40, I would suggest that unless you have a 10 year holding period and very strong threshold for pain to get out and buy back around 50 cents or so in a few months. Fundamentals dont matter in this market, psychology matters in the short to medium term. The recession will get worse in 2009, so expect these guys to heavily bleed cash all throughout 2009 (all 4Q's will be negative EPS). Hence, the management needs to STOP its BS about share buybacks and preserve as MUCH cash as possible, otherwise they will burn through the cash and will be forced to go BK ina few years even with just $38 mln of debt on their balance sheet. If they survive in 2010 when the economy turns around (hopefully), then I wouldnt see why they wont go back to 10 bucks or so, but that is just a guess, as it is impossible to predict in what state the CMOS market will be by then (by then OVTI will most likely lose all of its competitive advantage to the big boys due to the fact they will have to significantly cut back their capex, to preserve cash, and will fall behind as far as R&D is concerned, which is basically their only advantage in the past few years). The future here looks bleak to say the least. My apologies to the longs (as I am), but this is just something I have seen numerous times with companies like OVTI before. There are plenty of similar examples now as well, just look at HIMX for example...
just checked. reg t's $5 rule that applies to otc stocks appears to be still in effect. but even though the nas is not really an exchange, it's treated as such for purposes of reg t, or at least that's my understanding, so ovti is not subject to the $5 rule since it's not an OTC stock. just my opinion.
§ 220.11 Requirements for the list of marginable OTC stocks and the list of foreign margin
(a) Requirements for inclusion on the list of marginable OTC stocks. Except as provided
in paragraph (f) of this section, OTC margin stock shall meet the following requirements:
(1) Four or more dealers stand willing to, and do in fact, make a market in such stock and
regularly submit bona fide bids and offers to an automated quotations system for their own
(2) The minimum average bid price of such stock, as determined by the Board, is at least
$5 per share;
There are not prohibitions regarding a five dollar rule other than some funds or institutions may have their own regs. My apologies to anyone that I may have offended.
With respect to the cosmetic aspect (The PPS below $5), all the Company has to do is a reverse stock split.
The Company is financially strong enough to weather this.
If OVTI fails there will be many more companies that will fail before they do.
If MU fails soon as I expect it will OVTI's position in the marketplace will improve immediately.
you do know that a reverse stock split is a very negative signal to the market in about 99% of all cases, right? Imagine the people that bought it at above 10 bucks (which is the majority on this board), they will NEVER see their money again if they go through a reverse stock split.
Why are you even discussing with S Kiselev. He thinks he can cover it under 1 dollar. Total crazy. You see people, this market left only insane people posting here (I am included) All normal people are so frastrated that they can't even look at this anymore.
I disagree on most every point discussed, however I feel your pain as the stock price declines!
OVTI is BETTER positioned with a large cash hoard and no real direct manufacturing expenses to weather this current situation.
They are BETTER positioned to continue to fund R&D and get more profitable production deals.
The big boys like MU, AMD and even INTC are the ones who need to worry about cash flows if the global economy remains weak for years to come.
There have been many studies that support the idea that smaller, low-liability companies are BEST able to take advantage of recessionary periods to grow their business in the next upturn in business.
Yes, the overleveraged, deep manufacturing companies are the ones to lose sleep over at night. I sleep well owning a large chunck of OVTI at an average cost less than the cash on the balance sheet.
Remember that stocks typically lead the economy by a good 3-6 months. If you believe as I do that the economy will look much better by the summertime, OVTI's price will start to reflect better days quite soon. The January Effect, where beaten down small caps usually lift off when tax selling is done in December, should directly benefit OVTI's price in a matter of weeks.
I suspect a share buyback and an Obama bounce into the spring for all stocks won't hurt investment returns in OVTI either, from this incredibly low valuation.
my point is being reflected in the market action over the past few days. When the market went down 3% yesterday, OVTI went down another 10%. When the market is way up today, OVTI is still in the RED lol! No matter what the fundamentals are, this stock will go much lower due to intstitutional liquidation as I have stated above. Watch Monday, the market will be in the red and ovti will be down another 10%, it seems to be the normal trend here, and in the short run, the trend is your friend.