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Westell Technologies, Inc. Message Board

  • iletitride iletitride Oct 19, 2009 8:12 PM Flag

    Price @ close 9-23

    Let's start a little old fashion FWIW price prediction:

    I say that management releases either $.03/share EPS or, if software accounting (revenue recognition) has changed,then $.10/share. In first scenario, depending on the existence of guidance, the stock toys with $2 falls back a little and then settles in at or around $2. In second scenario, stock blows past $2 and settles in between $2.30- $2.50 before froming a new base for an even higher move. But what do I know.

    I will be looking for more relevant information regarding the ongoing transformation from a "hardware" to a "software" based business model. I wish some of the analysts would press the company a bit more on some revenue expectations derived from the Ultraline platform in the FIOS footprint. It would appear to me that WSTL is in the catbird's seat as the Ultraline footprint expands and as Verizon looks to expand FIOS capabilities. So in effect, while the CPE hardware revenues would continue to be flatline to slightly up, it is reasonable to expect a nice rise in software related revenue going forward.

    If this software story does begin to play its way out, then there is no doubt that WSTL becomes a takeover target. I read a couple of old articles on WSTL over the weekend. I was reminded that the ananlysts had Conference Plus pegged at a value of $75 MM or $1/share. The current cash position equates to another $0.72/share. So as I see it, today's closing price of $1.72 discounts the value of the two other business segments to $0.0. The outside plant segment has to be worth $1/share. So now we are up to a value of $2.72/share minus one business segment. That leaves us with CPE which is still losing money but gaining footprint in FIOS....So yes, the software story really is the linchpin and largest unknown in this valuation equation. At some point the company has to provide some sort of insight into the potential revenue for the software add-ons. As we get more color on the software model, then we will begin to see the true value of WSTL

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    • (IMO) I don't think this quarter will reflect any change to their current "deferred revenue" accounting. I kind of glanced at AAPL and how they released their recent quarterly results and it seems they kept the practice of supplementing the quarterly results with Non-GAAP numbers at the end of the report. (Hence, I think WSTL will still use the deferred accounting method this quarter). I think your profit estimate of three cents a share sounds about right. (I would be dissappointed with anything lower than that).

    • I hope they talk more about the MDU with VZ. It (MDU) was mentioned by a VZ exec in a recent speech. Any thoughts on what Actiontec is up to?

      • 1 Reply to wasssssupppppp
      • Clarification--what is your price target for end of day Friday, Oct 23.

        MDU or Multi Dwelling Unit FIOS business is still moving at a snails pace. A good part of the issue was found in a Verizon press release a few months back. Namely, access to each MDU has to be gained building by building or through management company authorization. This is certainly not a process that resolves itself overnight. WSTL will only be successful with MDU as VZ is successful in gaining access to all of those potential buildings.

1.11-0.01(-0.89%)Oct 9 3:59 PMEDT