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AsiaInfo-Linkage, Inc. Message Board

  • thunder_bird123 thunder_bird123 Jan 28, 2010 5:59 PM Flag

    accounting game asia is playing

    asia's business model is a low margin business. The GAAP this Q is only 0.29 vs 0.38 non-GAAP earnings. With most of revenue not recurring, such a low margin business doesn't derserve a high P/E. Looking at 16-18 stock price soon. If market really tanks, ASIA can goes back to 10 dollar again. Remeber, the upgrade cycle mostly will end in 2011, more warnings to come. I was expecting the warning to come in 2H 2010, now they start to guide lower sooner than I expected. Longer term Asia will trade below 10 once upgrade cycle is done.

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    • I was negative on asia not long ago when it trades in 30s. If you listen to my advice, you will save 10 dollars on the share already.
      The big money trading asia love to short asia on the way down and ride it on the way up.
      Don't you see asia start dropping way before big market tanks? With so many positive press release recently, asia kept going down.
      The question is why asia trade this way? I think the big money has good contact with the company and the industry and they knew this Q is no good way ahead of most players. That's why it start go down despite so many 'good' news.
      You are competing with big money with intimate knowledge of the company, and knows about TA very well.
      If I'm the big money, I will keep pushing down the price to scare the longs out. Then buy at lower price to push it up again.
      With big market tanking and china bubble talk in the US media, it doesn't make sense to push the stock up right now. Plus, asia is no market leader and has a inferior business model.
      I think it make sense to cut the peak price in half, which is 16 dollars. This maybe the fair value for asia. In bad market time, it certainly can go below 16.

    • i'm sure you're correct. asia is probably run by a bunch of complacent entrepreneurs who have no desire to branch out beyond the telecoms....fact is, all they have to do is announce a couple of contracts outside of the telecom space and the pps resumes upward trend...i'm willing to roll the dice with debt...few hundred million in cash with ops that throw off $ like there's no tomorrow...gonna be a volatile ride though...

      • 1 Reply to bipolarhermit
      • I think one shall look at GAAP earning rather than non-GAAP earning. The expenses of asiainfo is real and they have charges every Q. So forget about 0.38 headline eps, it's real eps is only 0.29.

        The biggest problem for asiainfo is what's is normalized earning when the upgrade cycle is done. It traded below 8 dollars not too long ago. This kind of project based company doesn't deserve a high P/E. The non-recurring nature of asia's revenue makes it more like a semi stock rather than software stock.
        I think asia can only earn less than 50 cents a year once the upgrade cycle ends in 1H of 2011. So it definitly can1trade below 10 by then. The way to trade asia is buy when their earning appears low and sell once the next upgrade cycle comes in. Too bad the upgrade cycle for china telecoms only comes once 3-4 years.
        If asia penetrates to other industrials with success, then I will change my opinion about it. Otherwise, it's just a single digit stock pretending to be a growth stock.

    • Look at MSFT, which earned 0.60 this Q and most of their revenue is recurring. ASIA GAAP is only 0.29, half of what MSFT can earn. MSFT is only trading at 29.4, asia shall trade at half of MSFT's price. The growth in asia is an illusion as their revenue is highly concerntrated and the upgrade cycle will be done in a year. It won't suprise me to see asia info trade below 10 in a year.

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