The results are in and the winner is … clgl which is experienced in trading and bought options for protection. I am a fundamentalist … old fashion, so I sold on the rally.
** Revenues 957 (me 955)
** Gross margin 375 (me 375, sorry for being 0% wrong)
** SG&A 110 (me 105, I thought less sales, less expenses, but I was wrong)
** R&D 186 (me 188, I did not thing the downsizing was in any effect in Q4, it should be in Q1)
** Operating earnings 56 out of which 20 are restructuring and 3 useless amortization, so actual earnings without one-off items 79 (me 82 without excluding 10 restructuring and ignoring amortization, so, sorry about my mistake, it is 79, not 82).
** Other expense (debt servicing) 127 (me 135, that is my mistake, I will check if numbers from the interest are right).
** Net income -35 (me -53, sorry, how could I have predicted FSL will benefit from a -37 tax credit instead of expense; so in real terms the quarter ended -72; anyway I spin it, I was wrong by about 15)
The question is, what will market do? Did anyone see VMWare today? -21%. I am simply curios to see.
Dunno if I "won" or not, all that hedging chopped 33% off my potential profit leaving me with a 17.6% gain when the CALL options I sold are (potentially) executed. Assuming it stays above $13 by opex anyway.
I could have seen a great deal more had I not hedged at all, but I also could have lost ALL my gains had things gone the other way.
______ 4Q12 3Q12
Revenues 955 1009
Gross margin 375 424
SG&A 105 110
R&D 188 187
Operating earnings 82 130
Other expense -135 -134
Q net income -53 -4
I expect severance packages in total of more than 10 mil USD in Q4, lowering further the quarterly net income to -63 mil USD. What investors don’t remember is that FSL took a fortune from the insurance premium after the tsunami hit its Japan factories, 60-70 mil USD in 2011Q4 alone for a shutdown factory (and continued in the next quarter). That base effect combined with lower sales because of the economy will be a drag for this quarter. The already large inventory at the industry level for 2013Q1 combined with the tsunami positive effect specific to FSL will be another headwind.
Keep this in mind and let the knife fall and buy again when the price is much lower.
ur mouth to Gods ears. Bought PUTS to cover some of my position if it tanks, sold OTM calls against ITM positions (except one, gonna keep 500 shares going through maybe), so hopefully it'll take a jolt and I'll make money both ways. Meanwhile, it's still a fairly reasonable long term position.