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Netopia Inc. (NTPAE) Message Board

  • jbacci jbacci Jul 30, 2001 10:45 AM Flag

    Not pleased with the report.....

    Another miss by NTPA, this time by a whopping 8 cents. And that off a twice revised (reduced) number. Are we to believe that this company will be profitable in twelve months, as forecast? Not me, atleast not anymore.

    Cash on hand is up?? Smoke and mirrors. A/R is down by over $8mm since last September. Very nice to see that, as we've learned, the "receivable" part of accounts receivable is never a given, and restricting short term financing for weaker customers is a good thing. But let's not call this an increase in liquidity. To my way of thinking, a company who cuts inventory and receivables by $2 million, and increases cash by $1 million is not better off in a liquidity sense. Reductions in A/R and inventory are finite. The fact of the matter is that, since last September, cash, A/R, and inventory are down over $15mm, and this is not good.

    The reason for my concern is that there is no evidence on the operating statement that the company is tightening its belt at all. Operating expenses have INCREASED in the face of a 30% plus revenue decline. All except R&D of course, which HAS declined. In an environment like this, you like to see atleast some evidence that a company is moving to cut its costs. On its way up, op. exp. here kept pace with revenues. On its way down, op. exp. are taking on a life of their own.

    This $51 million that they have on hand WILL go down next quarter. Perhaps alot. I'd like to see some evidence, (ar atleast lip service), from management that they will move to preserve this cash from its inevitable burn, thus giving this company a fighting chance at survival.

    The balance sheet is still strong, and cash still sufficient. Now is the time to get critical if you intend to remain long here.

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    • And we know how useful/accurate these analyst can be.

      I remember reading an article somewhere saying that if you would've bought and sold stock on analysts "Buy" and "Hold" recommendations, you would have been in the red.

      Seems like when these analyst makes recommendations, it's usually too late. They are just jumping on the bandwagon most of the time.

      -fat

      --
      BTW, I remember telling my broker at Prudential about NTPA in Feb/99 when it traded for $5. He showed no interest, but when Prudential recommended the stock 9 months later at $71 he was pushing it on everyone.

    • As of the last CC, their hardware portfolio gross margin percents were in the high 40's.

      Software business margins are in the high eighties, some license revenues and recurring revenues are probably 100% margins.

      Getting old? The China deal is a software deal. Seems like that is just beginning?

      Look, this company is in a very competitive area with a lot of uncertainty. But at least they are managing their resources prudently, and their business plan still makes sense.

      Receivables were down, inventory was down, cash was up. Sure revenues were down, whose revenues were not down during the last two quarters.

      Most experts seem to agree that the ILECs are going to leverage their copper assets at some point. Everyone I talk to, seems to be impressed with high speed service versus dial up.

      Maybe today is the beginning of the end of the down cycle. It has to end sometime.

    • We all know NTPA was never worth more than $35-$40 at its peak. That is why I sold all my large positions when it broke $50. Never dreamed it would go to $90. Unfortunately I started buying in the low $20's again because I thought it had strong support at $19.

      BTW, I remember telling my broker at Prudential about NTPA in Feb/99 when it traded for $5. He showed no interest, but when Prudential recommended the stock 9 months later at $71 he was pushing it on everyone.

    • Unfortunately I see it differently. Of course, your opinions are respected.

      Unless they find a new revenue model, I think it's hard for them to trade any higher than 10.

      The hardware business they are in have very little profit margin.

      Their software business is getting old. I see the software business as recurring maintenance type revenue. I don't see any significant new business there.

      Only my opinion.

      -fat

      --
      It could go as high as 25 in a year. However, 90 is too much. Anyone who paid more than 30 should have sold by now. I bought at 5.50,11, and 14.

    • Of course it wasn't worth 90 bucks.

      All those bubbletechs were at rediculous prices.

      Might be worth 10 or 15 bucks though.

      That's good enough for me.

    • It could go as high as 25 in a year. However, 90 is too much. Anyone who paid more than 30 should have sold by now. I bought at 5.50,11, and 14.

    • Very good post. I must agree with most of what you say. I also read the P@L and balance sheet and have the same concerns. The explanation for high sales costs might be that in face of fast dropping sales NTPA wants to keep as many salesman as possible since sales are the biggest problem of this company. Sales and not R@D are key issues in here.
      The liqiudity is indeed BS. NTPA needs some more sales and in this market it is very hard if not impossible. The stock price will drift for the next 6 months till we get some good news of new sales. I expect that the price will touch $2 - $2.50 range in the next few months. But it will not go much lower because of the strong ballance sheet and no danger of bancrupcy.

    • Cash is cash, period. The smoke and mirrors is in usually hidden in the areas that you say you are upset that they have decreased.

      Luckily, your way of thinking is not shared by anyone who reads balance sheets for a living.

      Lefkof stated that the 51 millions will shrink next quarter, it is priced in the stock. After all he said cash would not go below 45$ million, which give them 2.50 share in cash at worst case.

      By the way, most of your rant was addressed in the conference call. Did you listen?

      • 1 Reply to harwich_2000
      • Cash is cash?? NOTHING could be further from the truth, and THAT is what people who DO read financial statements for a living would tell you. Cash on hand is like the lobby of the office. The first thing people look at, particularly with a company like this. The easiest thing in the world for a company to do is to dress up the lobby by raising a bit of cash. Delay a payment here, force a payment there, and voila!, cash on hand is up. Do you remember Lucent negotiating a one day extension of a payment due date so they could post an extra $25 million on their quarterly?

        A much more reliable measurement of liquidity can be found by analyzing the quick and current ratios, both of which look worse than the cash on hand number.

        In conclusion...cash is NOT necessarily cash.....PERIOD.