Real quick...Not a bad quarter but at this point like my subject says it may be time to consolidate Westell into an Adtran, Lucent, Tellabs, etc.
The way I see it, what we have here in Westell is a nice $200 million company that is profitable with a good chunk of cash, about $54 million in cash with good technology.
That said I still think the company is worth over $4 bucks as is right now but I'm not sure that Westell's management is ever going to be able to get that out of day to day operations or impress the Street enough to warrant a valuation it should likely have of around $4 bucks.
As for consolidation, there appears to be another wave starting in telecom over the last few months....It might be in Westell best interest to be a part of it...Basically they might just be a good fit to become a division of somebody else with better resources and capital....Just my opinion.
I do think consolidation is the best option. We are synced up on the value of $4 plus. The stock continued to trade after hours to the upside well past the earnings announcement. the downside was on a limited number of shares. The conference call will be much more important than any short term trading in the early A.M. I do believe that the softness this quarter is not surprising given the economy but is nonetheless concerning. I would think that conference plus should be up not down in this type of travel restrictive environment. I did not catch any specific news from VZ indicating any significant capital cutbacks for the next 6 months. Also looking for more visibility on the software model.
Ihave to say that I am a bit confused on the supplemental revenue adjustments. Hopefully we will get a better explanation tomorrow. I would have expected an impact to profits over the term instead of zero adjustments to the profit/EPS.
Going forward, WSTL for the next two Qtrs will struggle to have $40M per Qtr and probably have losses. I agree that they should sell their divisions and liquidate. The question is, who would buy them for a decent price? They already failed last year to sell their conference division. Tomorrow, it is going to be ugly.