Not unexpected...there is no short term catalyst to continue the move north. Fiscal Q3 and Q4 are the slow seasonal business quarters with the cold weather and storms complicating OSP installs. Outside of a major announcement before the fiscal year end earnings release in May, I see a trading range of about $2.75-$3.40. I think we will see a slightly lower EPS($.04-$.06) in this quarter and next, but the business fundamentals are in tact. This should put the fiscal year earnings at approx $0.22/share, so the price range described above seems to be fairly valued at 15X's earnings.
I do anticipate some renewed momentum in the 2nd half of calendar 2011 as more homecloud visibility emerges. While I don't think they will have any meaningful business from this intitative until calendar 2012, the buzz should put some momentum back in play.Short term, I do not believe that this is a trade but patience will be rewarded a year from now. It all depends on your objectives..trading or investing.
Asid from Homecloud they are looking to move into the software area and internet over TV could resurrect that division in a large way. Also the buildout of 4g networks gives them yet another area up their alley.
I would expect new R&D to hinder Gaap results but they still should be able to margin well enough on a Non Gaap basis. Valuation will continue to get better as revenues start to ramp next year.We will need to understand the game because the road will be rocky but then smooth out quite a bit going forward. Next Q and guidance should answer more questions and clarify where they are presently at.