asia's business model is a low margin business. The GAAP this Q is only 0.29 vs 0.38 non-GAAP earnings. With most of revenue not recurring, such a low margin business doesn't derserve a high P/E. Looking at 16-18 stock price soon. If market really tanks, ASIA can goes back to 10 dollar again. Remeber, the upgrade cycle mostly will end in 2011, more warnings to come. I was expecting the warning to come in 2H 2010, now they start to guide lower sooner than I expected. Longer term Asia will trade below 10 once upgrade cycle is done.
I was negative on asia not long ago when it trades in 30s. If you listen to my advice, you will save 10 dollars on the share already. The big money trading asia love to short asia on the way down and ride it on the way up. Don't you see asia start dropping way before big market tanks? With so many positive press release recently, asia kept going down. The question is why asia trade this way? I think the big money has good contact with the company and the industry and they knew this Q is no good way ahead of most players. That's why it start go down despite so many 'good' news. You are competing with big money with intimate knowledge of the company, and knows about TA very well. If I'm the big money, I will keep pushing down the price to scare the longs out. Then buy at lower price to push it up again. With big market tanking and china bubble talk in the US media, it doesn't make sense to push the stock up right now. Plus, asia is no market leader and has a inferior business model. I think it make sense to cut the peak price in half, which is 16 dollars. This maybe the fair value for asia. In bad market time, it certainly can go below 16.
Look at MSFT, which earned 0.60 this Q and most of their revenue is recurring. ASIA GAAP is only 0.29, half of what MSFT can earn. MSFT is only trading at 29.4, asia shall trade at half of MSFT's price. The growth in asia is an illusion as their revenue is highly concerntrated and the upgrade cycle will be done in a year. It won't suprise me to see asia info trade below 10 in a year.