Recent

% | $
Quotes you view appear here for quick access.

Procera Networks, Inc. Message Board

  • petercohen33 petercohen33 Apr 4, 2013 1:47 PM Flag

    STIFEL March 22nd $12.37 / Buy Rated

    Updates from investor meetings
    We traveled with Procera CEO to meet investors in Salt Lake City. Our takeaways from the meetings were generally
    positive, with some near-term caution. On one hand we see increasing opportunities that could close in Europe, the Middle
    East and Africa. However, in the near-term, some of the revenue recognition issues that impacted the company in Q4 are
    likely to play a role again in Q1 and consequently, we are reducing our Q1 estimates by $1 million, shifting that into Q2
    while keeping the full year static. We continue to believe that outside of near-term pressures due to revenue-recognition
    issues, the stock remains attractive.
    We hosted Procera CEO James Brear at investor meetings in Salt Lake City last
    week. Our main thoughts coming out of the meetings are as follows:
    Business momentum is solid, in our view: The company continues to see solid
    RFP activity and demand globally (Procera has not seen the sales cycle
    lengthening or slowing down). This is particularly true in Europe, the Middle East
    and Africa. We believe that there are a handful of large opportunities that the
    company is responding to in those regions and is well positioned competitively.
    First quarter likely to see revenue recognition impact: While the overall
    environment remains strong, we get the sense that perhaps the revenue
    recognition issues that impacted the company’s Q4 are likely to also play a role in
    Q1. As such, while we had expected some of the slipped revenues from Q4 to flow
    into Q1, we believe that this is likely to happen only in Q2. Consequently, we are
    reducing our Q1 estimates from $14.1 million to 13.0 million (note that the
    company did not provide specific guidance for Q1 – Street consensus is however
    at around $14 million). At the same time, we are increasing our Q2 estimates by
    the $1 million that is likely pushed from Q1, while keeping the full-year static at $74
    million.
    The issue with opex and profitability: Mr. Brear admitted that the company

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • This is the part that jumps out at at me:
      "The issue with opex and profitability: Mr. Brear admitted that the company had done a poor job of communicating the increase in opex in 2013. First, headcount has doubled over the course of 2012 – from 100 to close to 200 (with 30 employees brought on due to the Vineyard acquisition). Consequently, opex jumps up considerably in 2013 to $44.5 million versus $31 million in 2012."

      It is difficult to formulate a commentary on this; "... had done a poor job in communicating ..." is such a casual explanation for glossing over critical business expenses that should be obvious and predictably have a profound impact on the bottom line.

    • Well what a shocker we have here. The stock is down $2.50 a share since this meeting. All a coincidence, right?

      • 1 Reply to pkarnett83
      • Let me add that clearly all the analysts of this stock have been telling clients to either sell or short over the last few weeks. I knew something was wrong that would eventually come out. Of course retailers like you and me are always the last to get the Memo, so by the time we learn of it, it's too late as the move has already been made.

        I've never seen a stock take such a beating based on freaking shifting revenue around from one qtr to another qtr. It makes absolutely no sense to me why the stock would take a beating because of this, especially considering that apparently the space is strong and the full year revenue estimate is not changing? But hey, who said the stock market makes sense?

        It does not appear that institutional investors such as those using Stifel as an advisor are done unloading/shorting. They know qtr 1 is going to be really bad, so I expect further weakness and further pain all the way up to the 1st qtr earnings release. Brutal world we live in.

    • had done a poor job of communicating the increase in opex in 2013. First, headcount
      has doubled over the course of 2012 – from 100 to close to 200 (with 30
      employees brought on due to the Vineyard acquisition). Consequently, opex jumps
      up considerably in 2013 to $44.5 million versus $31 million in 2012. At the same
      time, 2013 sales are backend loaded due to typical seasonality and the push-out of
      some revenues due to recognition issues. Consequently, Procera will lose money
      in Q1 before likely achieving profitability again in Q2.
      Business momentum is solid, in our view: The company continues to see solid RFP activity and demand globally
      (Procera has not seen the sales cycle lengthening or slowing down). This is particularly true in Europe, the Middle East
      and Africa. We believe that there are a handful of large opportunities that the company is responding to in those
      regions and is well positioned competitively. We believe that at least one Middle East opportunity might be to displace
      a major competitor. Some of these opportunities are moving from just analytics and monitoring to tiered services. For
      example, a mobile carrier in the Middle East is looking at offering free data and charging subscribers for various
      packages – for example, a Facebook package or a Spotify package. These opportunities highlight that DPI is starting
      to move from being a capital investment for intelligence gathering and congestion management to a capital investment
      for revenue-generation and personalization of services, which tend to do better even in periods when there is a capex
      crunch. We believe that U.S. fixed line operators – Windstream, Frontier, CenturyLink might implement some tiered
      services over the next 12 months using DPI as the building block.
      First quarter likely to see revenue recognition impact: While the overall environment remains strong, we get the
      sense that perhaps the revenue recognition issues that impacted the company’s Q4 are likely to also play a role in Q1.
      As

      • 2 Replies to petercohen33
      • Peter I think you are repeatingly preaching to the choir. I doubt anyone posting on this board fails to recognise the longer term potential of this company or appreciates its obvious strengths. The issue is does the PPS stabilize at this level or drop another 30 odd% prior to or after earnings are announced? For me this is all about making money, not about being right. Does it make sense to sell even at this level and re enter at a much lower lprice to both enhance total returns and offer some protection should the business take a lot longer than we anticipate for its profitability to return. We have been dead wrong for the last six months or so in our projections and I think it only wise to pay close attention to indicators such as short interest and Institutional ownership along with insider buying to confirm the tide is turning. Although we are hoping to see a turnaround in a couple of quarters global events could extend that time considerably and I for one don't want to have dead money sitting for what could be an extented length of time sitting at a bottom of a stocks value.

      • such, while we had expected some of the slipped revenues from Q4 to flow into Q1, we believe that this is likely to
        happen only in Q2. Consequently we are reducing our Q1 estimates from $14.1 million to 13.0 million (note that the
        company did not provide specific guidance for Q1 – Street consensus is however at around $14 million). At the same
        time, we are increasing our Q2 estimates by the $1 million that is likely pushed from Q1, while keeping the full year
        static at $74 million. We believe that the full year estimates are conservative and there is a likelihood that as the
        company wins deals through the course of 1H, management raises it full year guidance at the mid point of the year.
        Overall, we believe that the biggest risk seems to be the fluctuations in quarterly revenues due to recognition issues as
        the company continues to win larger deals.
        The issue with opex and profitability: Mr. Brear admitted that the company had done a poor job of communicating
        the increase in opex in 2013. First, headcount has doubled over the course of 2012 – from 100 to close to 200. While
        30 employees were brought on due to the Vineyard acquisition, the company also has doubled the sales headcount
        and added significantly to support staff to work with larger carriers. Consequently, opex jumps up considerably in 2013
        to $44.5 million versus $31 million in 2012. At the same time, 2013 sales are backend loaded due to typical seasonality
        and the push out of some revenues due to recognition issues. Consequently, Procera will lose money in Q1 before
        likely achieving profitability again in Q2. Overall, the added investments mean that the company is going to exit the
        year at an operating margin of only around 13%, lower than its long-term target of 17-20%.
        Vineyard opportunities continue to increase: The company is seeing increasing interest in Vineyard from even
        larger vendors that want to license the technology. Today, the deals are typically around $0.5 million a year and many
        companies

 
PKT
11.500.00(0.00%)Jun 4 3:59 PMEDT