It is a useful exercise to take out both interest and cash before calculating earnings. What is left shows you whether the company has a workable business model, and what kind of returns can be projected. If you want to make 7% pa you can put the money in your own bank.
to continue at the same rate as before, the corresponding figures for the same six months next year will be approx $40.8m sales, $34.4m margin. (I do like the GM). If you then project the same growth in expenses as before, you get $39.8m. This is a trading loss of $5.4m vs interest earned of about $2.5m, giving you a bottom line loss of $2.9m.
I sold today at $32. I like RDWR and hold a number of Israeli High tech stocks. Currently however, I think there will be a "sell on the news", and taken together with a likely ugly patch on the Nasdaq, its my opinion that I'll be able to buy back in much lower in the next 2 weeks. Just my opinion. I'm not a short or a knocker, but I would like to get back in under my Jul 27 buy at $27, and if the market tanks, which I think is very likely, under my initial entry of $21.
Your analysis would be excellent for normal businesses. If your analysis would be correct there should not be any premium for growing companies which may spend alot on marketing and development in early stages and may not make the same types of EPS due to this fact.
The truth of the matter is that RDWR's cash is a definite plus because it allows them to increase the mktg expenses at fast rates and attain market share without risking any cash flow problems. The fact is that their cash position is not deteriorating which is an excellent sign.
Of course in the long run the expenses will not rise at the same rate as sales!!! That is an absurd notion. If sales grow at this rate than I will be willing to see additional expenses in short run but in the long run that will be a big plus.