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Millicom International Cellular SA Message Board

  • gotgb2007 gotgb2007 Jul 22, 2008 10:47 PM Flag

    Just finished reading Q2 report

    Yes MICC did miss anaylsts estimates for Q2 and for that deserved a decline, but not 22%. I think a couple reasons, out of MICC hands, made this drop so brutal; negative reports from other Telecoms, short selling and margin calls, poor earnings fron big Nasdaq names, and the general NASDAQ sell-off that has been happening this year.

    Now with that said. I am trying to come with some ideas as to why the decline was so steep, and if MICC has the vision and financial strength to climb back into the 110's where i think it is fairly valued. We all know they missed estimates, but the growth year over year is quite impressive. Right up there with the likes of GOOG and AAPL. 30% plus growth in earnings and revenues and 50% subscriber growth is nothing to sneeze at, and not seen anywhere else in this industry.

    Other than the miss on estimates, I have two theories as to way MICC may have been dragged down so far. First they are planning to spend a lot of cash for future expansion, but they stil have significant debt. Second, food inflation may be a bigger problem going forward. I think MICC can manage the first effectively but the second is not under their control. Inflation in their markets is at its highest levels in years.

    Please respond with your thoughts. And please only those who are knowledgable about this stock. It is funny how the board gets so active after huge moves, from people who are not well educated on the stock or markets as a whole. I hope we can get serious thought and discussion.

    Finally, one thing to look at or rememeber. MICC had almost the same exact drop after 2007 Q2 earnings, about a 35% move down to about $85 and rallied to $120 after Q4 2007 earnings. I hope and think this may happen again. There are just way to many positives for MICC and not enough negatives. GO MICC!!!!! Longs will be rewarded but it may be a little LONGer road that we thought. And you can thank the mortgage bankers and individuals not intelligent enough to understand the terms of their loans for that.

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    • I don't have a long history following this stock. I bought it as a great oversold play on a missed quarterly earnings report. In my quick analysis, it is in the right geography to continue its rapid growth. As such it is also a prime takeover play from some major players that may need to purchase share in growing markets (can you say Vodaphone?).

      I'm not concerned about the food inflation issue. The people in Latin America and Africa who are MICC customers are not those living on the margin at all - they are the upwardly mobile of their areas (dirt poor to us, but doing well in local comparisons). By analogy, can you imagine a circumstance that would dictate that you give up ALL communication capability (most areas have no real land line alternatives)? It would be the last thing to go, because it is required to earn income.

      Anyway, on a trading basis I picked up about a third of what I want my ultimate position to be @$74.59, thinking I'd be able to pick up more on subsequent follow through weakness (I expected some continuation the next day). It has been above that since, but I'm trying to be patient and buy below $75. I think all stocks are going to have some strong headwinds in the current market environment, but I'm a long term thinker. Actually, the market situation will perversely encourage a take over IMO.

      Anyway, those are my theses for ownership.

    • Agree with your post. MICC will be above 100 within 3-4 months!

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