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Oclaro, Inc. Message Board

  • riverhigh22 riverhigh22 Feb 1, 2013 9:33 PM Flag

    Comment on CC and todays reaction

    I wouldn't place too much emphasis on todays's action. This is a penny stock which widley fluctuates on small trades. Give it a couple of weeks for the dust to settle.

    As to the CC this was first time, in my memory, that Alain Coulder did NOT come accross in the opening remarks brimming with confidence. Sure Alain was positve in his responses in the Q & A but that's what CEOs do. Contracting revenues, future losess (15m - 25m losses next quarter), 10% annual price erosion, piling up of debt, selling assets to stay alive ... hard for any CEO to be openly positive when presenting the quarterly results. With pending sales of assets this cannot be positive for employee morale and productivity (selling of assets and piling up debt reminds me of Nortel before going into Chapter11).

    However, as mentioned in a previous message, a savvy investor will look at the liabilities reported on the balance sheet and calculate the furtures losses. I reviewed the balance sheet and it was a complete mess. However, what I did notice was that total liabilities increased from 161m in June to 324m in Dec 31. True a lot of it could be a result of the merger, however, with future losses at the high end of $25m I qustion the viability of Oclaro. The fact that the balance sheet is a complete mess with questionable accounting entries I would stay away from this stock.

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    • River, I have a lot of respect for your thoughtful posts and I took a look at the BS, specifically the increase in liabilities that you mentioned and found a similar increase in Current Assets, so that shouldn't be as much of a concern. What's your main concern with the BS?

      • 1 Reply to sean21448
      • == I took a look at the BS, specifically the increase in liabilities that you mentioned and found a similar increase in Current Assets

        True but the increase in current assets was in Receivables and more importantly Inventories. Inventories increased to $150m which is approximately 100% of estimated sales next month. We could be looking at some serious obsolescent inventory cosidering that JDSU carries approximately 40% (172/420) of next month's sales in invetories. Even after selling assets and issuance of bonds they have only 78m in unrestricted cash. Take away 2 quarters of 50m in losses (worse case scenario) and, imho, you got yourself a liquidity probelm. Who do you pay first - Line of Credit (41m), Bond Holders (24m), Vendors (123m)? The list goes on. We are talking high risk here.

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