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Zhone Technologies Inc. Message Board

alakamuna 36 posts  |  Last Activity: Apr 23, 2015 4:04 PM Member since: Jun 24, 2008
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  • "Management is optimistic that Zhone will return to profitability this year driven by the launch of its new fiber MXK-F platform, increased investment by its leading customers, and growth in its FiberLAN
    business. We are modeling more conservatively. Management remains confident its FiberLAN business can become a $100 million business in 5 years.

    "We are maintaining our Buy rating and $4 price target. Our price target is based on 1x our 2016 sales estimate of $126.3MM".

    Sentiment: Strong Buy

  • "We are issuing 2016 estimates and we expect the high margin FiberLAN business to begin to have a more significant impact on ZHNE’s income statement. We are forecasting revenues of $136.3 million (+12.5%), EPS of $0.17, and EBTITDA of $7.3 million".

    "Given the outlook for improving results throughout 2015 and 2016, we are maintaining our $4.00 target which equates to a 2016 E/V Sales multiple of 1.0x and a 2016 EV/EBITDA multiple of 17.5x. Given implied appreciation potential, we are maintaining our BUY rating".

    Sentiment: Strong Buy

  • Reply to

    Bashers

    by abare_bull Apr 22, 2015 1:15 AM
    alakamuna alakamuna Apr 22, 2015 4:50 PM Flag

    ineeda77,

    Zhone is far more valuable today than the price Calix paid for Occam. Some of Zhone's assets include MXK, MXK-F, FiberLAN, Intellectual property portfolio, R&D capability, a solid customer base including several tier 1 international carriers, and NOLs. I think that a minimum threshold for that valuation number is around $250M. If Zhone can execute based on what was suggested during the conference call, we'll get there within one year. This minimum number will give Jim little over $5M for his efforts.

    Sentiment: Strong Buy

  • Reply to

    Bashers

    by abare_bull Apr 22, 2015 1:15 AM
    alakamuna alakamuna Apr 22, 2015 2:53 PM Flag

    ineeda77,

    I share your premonitions about IBM and Tellabs, but not necessarily the timing.

    Sentiment: Strong Buy

  • alakamuna by alakamuna Apr 21, 2015 11:23 PM Flag

    They delivered on the guidance they had provided. Actually they did better: the margins were higher than those projected, operating expenses were less than the guidance, and as a results they had significantly smaller loss than what I had feared. A good start for 2015.

    Guidance provided today was a confirmation of that provided at 4Q14 call in January earlier this year. They seemed very confident that in Q2 they will be profitable, and the profitability will increase is subsequent quarters. They also reiterated their expectation that FiberLAN will be a $100M business in 5 years. New MXK-F for large customers with larger scales deployments, FiberLAN with 10% higher margins and 100% annual growth, and the new cost structure, all point to their stated objective of sustained growth and increasing profitability. If they deliver what they have promised in Q2, it will enhance their credibility along with the value of the company. So far so good.

    Sentiment: Strong Buy

  • Reply to

    Etisalat

    by ineeda77 Apr 17, 2015 12:09 PM
    alakamuna alakamuna Apr 17, 2015 2:57 PM Flag

    episteme_42,

    You are correct. And Zhone's share is about 50%.

    Sentiment: Strong Buy

  • Reply to

    Bye Bye or Buy Buy???

    by cristianogerminario2014 Apr 15, 2015 11:42 AM
    alakamuna alakamuna Apr 16, 2015 4:22 AM Flag

    xenoxeno1960,

    You are correct, I do not have a telecom background. Here is how I got interested in Zhone.

    I was fascinated with the promise of fiber optics, and the possibility suggested by Maxwell of splitting a wavelength into multiple wavelengths, over and over again, forever. This possibility led to George Gilder's prophesy of infinite bandwidth. In this vision, access was going to be the challenge and the prize. I noticed Mory when he sold Ascend to Lucent for $24B. I noticed Zhone when it started buying companies hurt by the bubble. I was hopping that such an accumulation of IP will lead to some great access technologies and products. That It did. But marketing and selling these products profitably is where it has yet to deliver. This in turn has created the value play it is today. All's Well That Ends Well.

    Sentiment: Strong Buy

  • Reply to

    Bye Bye or Buy Buy???

    by cristianogerminario2014 Apr 15, 2015 11:42 AM
    alakamuna alakamuna Apr 15, 2015 8:01 PM Flag

    xenoxeno1960,

    Thanks for your kind and generous comments.

    Regarding my investments, without going into details of my personal portfolio, let me say that Zhone is an extremely important investment for me. As a result I make all reasonably possible efforts to stay informed about the company. Even that get you only so far.

    Since hindsight is 20/20, it is clear that buying as many shares as possible at around $0.50, and selling all or most of my Zhone shares at around $6 would have been optimal. I only got the first part right. I did trust in Mory's projections for FiberLAN, which turn out to be overly optimistic, or premature. However, I sill believe in a great future for POL, and that FiberLAN will get a decent chunk of this market. Jim Norrod seems to have the right credentials and temperament to build this business. If he is successful, he himself and his investors will do fine.

    For me Zhone is and has been a value play where risk is compatible with reward, at least for my personal tolerance threshold. I believe Zhone has great technology, great products, and great R&D team. There is only one question that Zhone's management needs to answer by their performance. Can they leverage these great assists into profitable sales growth? Investors (not traders) are buying and selling based on their own answer to this question.

    Sentiment: Strong Buy

  • Reply to

    Zhone/TE Combo

    by stockgator14 Apr 9, 2015 12:46 PM
    alakamuna alakamuna Apr 14, 2015 7:23 PM Flag

    xenoxeno1960,

    You are correct, Tellabs is ahead of Zhone in POL market. They started POL more than two-years before Zhone did. And during this time they have done some very high visibility projects. Potential market in POL is huge, and Zhone does have the advantage of better product line. Jim Norrod was brought in primarily for his expertise and experience in enterprise business, and he brought in Monique Apter for the same reason, Lets see if they can show some results.

    Sentiment: Strong Buy

  • Reply to

    25$ for internet access

    by luislukeyserloveyou Apr 13, 2015 1:48 PM
    alakamuna alakamuna Apr 13, 2015 3:12 PM Flag

    Another significant aspect of the news was that it was announced by TE Connectivity, not Zhone. Why a 224-unit apartment development was significant enough to the $14 billion global technology company to go through formal news announcement?

    Sentiment: Strong Buy

  • Reply to

    Currency

    by mister_utopia Apr 11, 2015 7:47 PM
    alakamuna alakamuna Apr 12, 2015 1:23 PM Flag

    Below is an excerpt from an article published in The Wall Street Journal on March 11, 2015:

    The stronger U.S. dollar has hurt exporters and could dampen their investment plans for next year, top business executives said in a new survey.

    The quarterly Duke University/CFO Magazine Global Business Outlook Survey, released Wednesday, polled about 1,000 business executives–mostly CFOs–around the world.

    Two out of three big U.S. exporters–those with at least one-fourth of their total sales overseas–said the appreciation of the dollar has had a negative impact on their businesses. And nearly one-fourth of big exporters said they have reduced their capital spending plans as a result.

    Executives across many sectors–from construction to manufacturing to healthcare–pointed to the strengthening U.S. dollar against most major currencies as an emerging risk that has developed over the past six months.

    “We are in a midst of an ugly contest to see whether the eurozone, Japan or Canada can depreciate the most against the U.S. dollar, and China is probably next,” said Campbell R. Harvey, a professor at the Duke Fuqua School of Business and a founding director of the survey. “U.S. exporters are being punished by these competitive depreciations and this will lead to lower profits and less employment.”

    Sentiment: Strong Buy

  • Reply to

    The Market Mirage

    by alakamuna Apr 11, 2015 2:08 AM
    alakamuna alakamuna Apr 11, 2015 2:15 AM Flag

    Share prices have also been driven up by low interest rates that have allowed companies to borrow money on the cheap and use it for short-term gain. Corporate debt (not including debt held by banks) has risen from $5.7 trillion in 2006 to $7.4 trillion today. Much of that money has been used for stock buybacks, dividend increases and mergers and acquisitions. The OFR believes that “although this financial engineering has contributed to higher stock prices in the short run, it detracts from opportunities to invest capital to support longer-term organic growth.” As William Lazonick, an economics professor at the University of Massachusetts at Lowell who does research on the topic, puts it, “We’ve moved from a world in which companies retain and reinvest their earnings to one in which they downsize and distribute them.”

    Nobody–not Economists, not CEOs and not policymakers–thinks that’s good for real economic growth. Yet the markets stay up because of the dysfunctional feedback loops. Eventually, of course, interest rates will rise, money won’t be cheap anymore, and markets will go back down. None of it will reflect the reality on the ground, for companies or consumers, any more than it did during the boom times. For individual investors, there’s no clever strategy to get around any of this–you simply buy an index fund and hold it as long as you can before moving into T-bills or cash.

    But there’s a deeper conversation to be had about how we might fix our system to bridge this gap between markets and reality. There are plenty of ideas out there, from a sliding capital gains tax based on how long you hold a stock to big limits on buybacks and corporate options pay. Any or all of these might help stock prices reflect what they should–the real value of a corporation.

    The above article was written by Rana Foroohar, and was published in Times magazine on March 26, 2015, and may not be relevant to Zhone, but is interesting nonetheless.

    Sentiment: Strong Buy

  • Reply to

    The Market Mirage

    by alakamuna Apr 11, 2015 2:08 AM
    alakamuna alakamuna Apr 11, 2015 2:11 AM Flag

    CEOs, who are paid mostly in stock and live in fear of being punished by the markets, race to hit the numbers rather than simply making the best decisions for their businesses long term. One National Bureau of Economic Research study found that 80% of executives would forgo innovation-generating spending if it meant missing their quarterly earnings figures. It’s a system that, as behavior economist and Nobel laureate Robert Shiller puts it, has emerged from “convenience rather than logic.”

    That’s not to say that stock prices don’t give valuable insight into what’s driving corporate America. A recent report from the Office of Financial Research (OFR), a government body that monitors financial stability, dug into why U.S. stocks have tripled over the past six years. While the gains in the market have indeed been driven by rising corporate earnings, that fact obscures a more troubling truth beneath–sales growth is trailing well behind earnings growth. Companies have higher profit margins (and thus higher stock prices) not because the economy is booming and they are selling more stuff but because they have cut costs, kept salaries flat and not invested in new factories or research and development.

    Sentiment: Strong Buy

  • alakamuna by alakamuna Apr 11, 2015 2:08 AM Flag

    One of the hardest-dying ideas in economics is that stock price accurately reflects the fundamental value of a given firm. It’s easy to understand why this misunderstanding persists: price equals value is a simple idea in a complex world. But the truth is that the value of firms in the market and their value within the real economy are, as often as not, disconnected. In fact, the Street regularly punishes firms hardest when they are making the decisions that most enhance their real economic value, causing their stock price to sink.

    There are thousands of examples I could cite, but here’s a particularly striking one: the price of Apple stock fell roughly 25% the year it introduced the iPod. The technology that would kick-start the greatest corporate turnaround in the history of capitalism initially disappointed, selling only 400,000 units in its debut year, and the company’s stock reflected that. Thankfully, Steve Jobs didn’t give a fig. He stuck with the idea, and today nine Apple iDevices are sold somewhere in the world every second.

    This story illustrates the truth: Stock prices are usually short-term distractions, while true value is built up over time. According to McKinsey, 70% to 90% of a company’s value is related to its likely cash flow three or more years from the present. That makes sense–making money from new inventions takes time. Yet Wall Street analysts, whose opinions help set stock prices, typically base their assessments of a firm on one-year cash-flow projections. What’s more, like all individuals, they have their biases; during boom periods, they tend to believe that corporate earnings will be higher than during bear markets, regardless of the underlying corporate story.

    Sentiment: Strong Buy

  • Reply to

    Shocking...

    by gandhip Feb 19, 2015 8:52 PM
    alakamuna alakamuna Mar 4, 2015 7:20 PM Flag

    xenoxeno1960,

    Well stated! I fully agree with you on pretty much everything you have articulated.

    Sentiment: Strong Buy

  • Reply to

    Three Catalysts…

    by alakamuna Feb 11, 2015 12:53 AM
    alakamuna alakamuna Mar 1, 2015 3:54 PM Flag

    patience4meandyou,

    That makes two of us. I think we both, as well as many others, are counting on Jim to be right in his positive guidance he provided at the last conference call.

    Filings as of 12/31/14 on NASDAQ, show a net positive increase in institutional holdings. There were 10 new positions with 890,000 shares, and there were 24 increased existing position by 1, 182,000 shares. While 2 existing positions were closed out with a total of 38,000 shares, and 14 existing position were decreased by 409,000 shares. I think we will see an increase for this quarter as well.

    Sentiment: Strong Buy

  • Reply to

    Three Catalysts…

    by alakamuna Feb 11, 2015 12:53 AM
    alakamuna alakamuna Feb 11, 2015 11:36 PM Flag

    please_buy_while_i_sell,

    Brian Caskey and Robert Smith are not with Zhone anymore, regardless of what their Linkedin information indicates. Most likely they have not updated their Linkedin profile, just like Jim Norrod, who according to his Linkedin profile is currently at LiquidPiston.

    Sentiment: Strong Buy

  • Reply to

    Three Catalysts…

    by alakamuna Feb 11, 2015 12:53 AM
    alakamuna alakamuna Feb 11, 2015 8:29 PM Flag

    ineeda77,

    He was let go for a simple reason they want to be profitable starting in Q2, and increase the profitability going forward. As pointed out by episteme_42, his performance as well as his high pay may have helped in choosing him as one of the suitable person to let go.

    Sentiment: Strong Buy

  • Reply to

    Three Catalysts…

    by alakamuna Feb 11, 2015 12:53 AM
    alakamuna alakamuna Feb 11, 2015 8:22 PM Flag

    episteme_42,

    Thank you.

    Sentiment: Strong Buy

  • Reply to

    Three Catalysts…

    by alakamuna Feb 11, 2015 12:53 AM
    alakamuna alakamuna Feb 11, 2015 3:22 PM Flag

    Episteme_42,

    Please elaborate.

    Sentiment: Strong Buy

ZHNE
1.95+0.0100(+0.52%)Apr 24 4:00 PMEDT