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Procera Networks, Inc. Message Board

  • drgreatscott drgreatscott Aug 9, 2013 1:52 PM Flag

    DPI sector doomed?

    Any got the same feeling that the DPI sector is doomed?
    Why the multiple is so low? Because it's a low growth sector and revenue doesn't matter that much anymore?
    PKT should really try hard to expand to a new growth sector. Whatever means necessary. Organic growth, change of management, change of brain, whatever. PKT still has a lot of money. Expand its solution for a new growth sector and change the low multiple destiny before it's too late?
    Investors have been giving PKT a long long time to change. Wake up plzzz!

    Sentiment: Sell

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    • I will add that one big reason to be worried about the DPI space, is that despite these horrific valuations (PKT at 4% cash and way less than 2x 2013 revenue, let alone factoring in any future growth), no large players have made any attempt to acquire either PKT or ALLT. You would think that if it really was a promising sector with wide applications and future growth, SOMEONE would make an attempt to buy one of these companies. I mean they are paying 6.25x revenue for APKT and 10x revenue for FIRE. And PKT is at 1.7x revenue and not a peep from a large player? That is the most disturbing thing.

    • Let me try to reply again. Last time I replied and double checked after the post, but the post disappeared the second day. I am just a concerned investor and I am not shorting PKT, yet.

      After more research and listening to the recording of the CC carefully, I finally understood why analysts treat DPI sector as doomed. Regardless of the performance of Allot, PKT itself has book-to-bill rate below 1 in Q2. For those of you who do not know, "A ratio of above 1 implies that more orders were received than filled, indicating strong demand, while a ratio below 1 implies weaker demand. " (excerpted from Investopedia). No wonder analysts were pessimistic about DPI sector and PKT.

      Consequently, there was a sell off from the smart investors after Q2 announcement. Seemed to me that JB did not want investors to know too well about it, so he started by saying the ratio this year overall was above 1. Later a smart analyst kept pushing him for the number and finally PKT admitted that the book-to-bill ratio in Q2 was below 1. This, together with all the other hints, is a strong indicator that DPI sector could be doomed.

      If a sector is doomed, the multiple should be low, no matter how much revenue companies have. This is PKT's biggest problem right now. PKT's reaching revenue target in a doomed sector wouldn't help. Vineyard acquisition is for OEM business in DPI, which doesn't help either. PKT's experimenting different charging model is still in DPI sector. Seems to me, and likely analysts, that the efforts PKT mentioned in the CC were all in DPI, which is likely a doomed sector.

      PKT should go behind DPI sector as top priority by all means. Change of management, change of brain, organic growth, whatsoever. PKT still has $111M in cash and should expand the market beyond DPI sector otherwise it might not have a future in many analysts' eyes today. PKT should apply its technology to growth sectors, not sticking to the DPI sector.

      My 2 cents, posted a week ago while disappeared.

      • 2 Replies to drgreatscott
      • That's a good possible explanation on why they are not using their cash to buy back at these prices or communicating. Does PKT have the executive talent to go a different direction?

      • The DPI sector is doomed, this company has no future, and the analysts are pessimistic? Can you then explain why some raised their PT after the CC and why they all have Buy ratings?

        Did you read the Infonetics report from earlier this year that reported they expect DPI to grow by a CAGR rate of 33% by 2017?

        The book to bill was slightly above 1 if you don't include that $2m from the 4th qtr. ALLT had a book to bill above 1 and what did that do for them?

        No doubt this stock is an absolute dog and the management is worthless to shareholders, but to say DPI is doomed and this company has no future is a little hyperbolic.

    • drgreatscott u obviously did not listen to the conference call and seem to know very little about Procera, DPI is yesterday's news everyone has it and offers it . Procera has moved way beyond DPI. Listen to the conference call get current than contribute.

 
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