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Ceragon Networks Ltd. Message Board

  • boyyoulove boyyoulove Dec 28, 2013 9:17 AM Flag

    Question for those familiar with CRNT

    I am new here, looking into CRNT. CRNT had about $40m by end of 3Q2013, down slightly from $47m end of 3Q2012. Why was it necessary to offer stock at rock bottom $2.4 and price/sales less than 0.25?

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    • Some possible reasons.

      They have mentioned that much of the cash is sitting in low-tax jurisdictions so you bring it back you pay tax. They have generated losses over the years so I must admit that I am somewhat surprised that they mentioned this. They have not done a good job of tax planning and could have avoided some of these problems. At least it is my experience that some of the problems can be planned around given their overall situation.

      They also announced that the latest restructuring would cost around $20 million. I'm going from memory there so check the last call. Imagine it is layoffs in Norway. Don't know for certain what the rules are there but in the much of Europe (excluding UK) when you lay people off you have significant severance liabilities.

      They also have very extended receivable terms in South America where many of their sales are so you have the cost of producing the equipment but don't get paid for over 100 days. Generating sales creates cash flow issues in the short-term. I've always wondered why they didn't increase the credit line. I would have thought they could borrow against the receivables but maybe African or South American receivables are less credit worthy.

      Maybe they are going to buy out some of their competitors. The two public ones, DRWI and AVNW are hurting. DRWI sure looks like it is on the edge of bankruptcy with lots of cash flow issues and not much cash. AVNW has a fair amount of cash but they have never even come close to profitability so what is the point of staying in business? Shareholders would be better off if they stopped trying to sell their products. DRWI and AVNW actually sell at a premium to CRNT which doesn't make much sense to me.

      Bottom line, I really don't know, those are just some think out loud thoughts.

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