Overall, I was pleased with the conference call. To me, the main thing to note is that they are ramping up on three different programs that are all in the $10-20 million range (revenue per year). Oehlke stated that it was very unusual for them to be ramping up on three big programs like this at the same time (and also commented that they have had some bumps along the way).
They also stated that the profit outlook for the next quarter is murky because there are so many unknowns with the ramp-up on these three programs. The best they could say was that they expect to be around break even again next quarter on a revenue increase of 10-20%. I got the definite impression that they would much rather under-promise and over-deliver rather than have any negative surprises down the road. This seems to be consistent with previous conference calls.
In addition to these three large new programs, it sounds like they have multiple smaller programs in the works for various customers. It was also stated (I think by the CFO) that all of their current programs that are in production should continue throughout the year (none of them reaching end-of-life).
In the past, it seems like the stock has taken a few days to respond to the earnings/conf. call, so I'm hopeful we will continue the rise next week. With prospects for a great fiscal Q4, and the potential for upside surprise in Q3, its hard to predict when we will get a big run-up. I'm confident it will happen eventually, just not sure about the timing of it.
While they put a generally positive spin on things during the call, afterwards I was somewhat bothered by the feeling that for all three major programs, they kept running into big problems and having to redesign things, etc., sounding lost in their fog. I would not be surprised if at the next call, they were saying something like 'we were not profitable due to continued delays in getting these programs actually running, but hey the future is rosy.'
Yea, I am a little worried about that, too. I would have been a lot more comfortable if they had said "we've done these large programs before, and while they typically have issues that come up, the issues we're seeing on the three new programs are within the normal range of issues that can be expected for a program this complex".
That said, based on past calls, they have been careful to only promise what they have been able to deliver. I think the hesitation and murky outlook reflects their typical conservative approach to these calls.
The worst case scenario that I see would be the one you suggestd where they would say 'we were not profitable this quarter due to continued delays.." In that case, I still feel like the only downside would be an additional quarter of delay in what I think will be an impressive ramp in both revenue and profits. I've been here long enough that an addition quarter of waiting doesn't bother me.