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Vertex Pharmaceuticals Incorporated Message Board

aurorainsider 42 posts  |  Last Activity: Jul 31, 2015 6:40 AM Member since: May 8, 1998
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  • aurorainsider aurorainsider Jul 31, 2015 6:40 AM Flag

    The R&D component was an interesting discussion point on the call. I have been keenly concerned about that disparity to sales for some time so I was very encouraged to hear both Toms address this issue. Tom G actually said that WSTL would have been profitable had they had more normalized R&D spend. That would put that spend somewhere in the $2.5- $3.0 range. Then Tom M when pushed on a break even model with a lowered R&D spend maintained his $25-$27 M number. Actually, by my numbers, if the company hits $23 M in sales at 40% margins, Opex remains where it is at and R&D comes down to $3M, then WSTL should turn break even/profitable.

    So again going into calendar 2016, I would anticipate a 12 month run of profitable growth and solid growth at that should wireless CAPEX moderate. This speaks nothing to the potential growth attributed to new product uptake and sales team build out on ISM as was highlighted by Tom G

  • aurorainsider by aurorainsider Jul 30, 2015 8:42 AM Flag

    The new CEO has managed to begin turning the boat around. Nice work on margins and top line traction. He has beefed up the defunct sales team and those efforts are paying off. I noticed that the R&D spend was at a record level as well. If he chooses to taper those investments back to 10-12% of sales, then the company turns profitable. I suspect we will see this accelerated investment until a couple of these new products begin to show a sales ramp. Until then, the company will eat minimal cash and position itself handsomely for the return in wireless CAPEX. The stock price should begin to reflect this change in momentum which took a downshift in Spring 2014. It should be an interesting next 12 months. I wouldn't be surprised to see the price accelerate going into the end of the year. I suspect our lone analyst bumps the target price up modestly to $2.50-$2.70

  • aurorainsider by aurorainsider Jul 28, 2015 10:58 PM Flag

    COMM scope up 4% on the day. Without mentioning names, it was clear that AT&T is stingy on its wireless spend. If stocks are always forward looking, consider Commscopes move today and consider this which Also came from their prepared comments portion:
    As previously highlighted, we continue to believe the North American wireless carrier spending will modestly strengthen as the year progresses. As we’ve noted many times, our quarter-to-quarter wireless business can be lumpy. However, we believe continued global investment in LTE coverage and capacity over license spectrum, will remain a strategic initiative for wireless operators over the long-term. As a result, we remain confident in our long-term growth prospects.

    Management also indicated more normalized wireless spending patterns in 2016.

  • aurorainsider by aurorainsider Jul 28, 2015 9:04 AM Flag

    Commscope came out with earnings today. Substantially lower spending by NAmer wireless carriers in first half of the year. No commentary yet on forward spending. So clearly don't expect any upside at WSTL. It appears as though AT&T continues to drag its feet. You can see the expectations reflected in share prices of other small players like WTT and PCTI .

  • Reply to

    Verizon Wireless Cap Ex, DAS and Small Cell

    by phennes591 Jul 22, 2015 9:24 AM
    aurorainsider aurorainsider Jul 22, 2015 3:16 PM Flag

    Agreed. Well said

  • Reply to

    Verizon Wireless Cap Ex, DAS and Small Cell

    by phennes591 Jul 22, 2015 9:24 AM
    aurorainsider aurorainsider Jul 22, 2015 10:39 AM Flag

    While Verizon numbers are a good thing, Westell's issue is really that AT&T is NOT a 10% customer. AT&T has reportedly taken a different approach to its spend that may impact the prioritization of projects. The fact that they were not even a 10% customer really shows the lack of focus on the smaller projects. Westell will continue to languish unless AT&T ups their spend.

  • Reply to

    Verizon Wireless Cap Ex, DAS and Small Cell

    by phennes591 Jul 22, 2015 9:24 AM
    aurorainsider aurorainsider Jul 22, 2015 9:51 AM Flag

    At this point, the company has to start showing evidence of returned growth. All of the speculation about the market dynamics is irrelevant until the company delivers. To see $5000 trade hands yesterday in trading is just mind boggling. I have never seen a volume that low. Simply no interest until the company delivers, period!

  • Reply to

    hard to understand share price

    by my_fathers_son_1 Jul 6, 2015 3:47 PM
    aurorainsider aurorainsider Jul 6, 2015 6:45 PM Flag

    Phenne...that poster was just being a clown that it is regarding goodwill, implying the stock is actually falsely elevated, not the other way around.

    $0.63/share cash, another $0.25-$0.30/share in tax savings($47 millmill tax loss benny @ 35% tax rate). So approx $0.90/share excluding operations. So that is the starting point. So would COMM pay$2/share today. You bet. But to Fat's comments, they will need at least 6 more months of sales acceleration before any uposide to a basic $2-$2.25 valuation can be discussed.

  • Reply to

    Would CommScope Be Interested In Westell?

    by phennes591 Jul 1, 2015 5:43 PM
    aurorainsider aurorainsider Jul 1, 2015 6:42 PM Flag

    So just how is COMM going to steal Westell with the Trust ownership structure? Had this structure not existed, Westell would have been taken out a long time ago during the DSL days at a significantly higher price. It has been stated here and even on one of your last calls by an analyst that the ownership structure is in effect a handicap. I'm sure that Jeffrey Bronchik at Cove Street is realizing just how little leverage that he has so long as greater than 50% of the vote is controlled by the Trust. I think that it is fair to say that there would be significantly more interest in the stock if the ownership structure were different and a share price reflecting that fact

  • Reply to

    Time for Board Approved Buyback

    by aurorainsider Jun 11, 2015 9:38 PM
    aurorainsider aurorainsider Jun 15, 2015 9:16 AM Flag

    Look at a couple of the smaller companies in the same space. PCTI and WTT give you a couple of examples. Both are around 10% R & D to sales and both have managed to show break even or better.

  • aurorainsider by aurorainsider Jun 11, 2015 9:38 PM Flag

    While I am a fan of executive stock purchases in the open market, I am not generally a fan of company stock buybacks. However, at this price level, this would be an inexpensive way to reduce the float and heighten earnings when the business accelerates or when the company gets more prudent with their spend (R&D)

    Speaking of earnings, or lack there of , the company is still running at North of 20% of R&D to sales. I think that the Street has a real appetite for the company to bring Opex down or show significant acceleration of sales before you get any buying interest. One analyst actually called out this question. It was met with an answer to get gross profits at a 40% rate by product cost savings initiatives. However, the CFO chimed in that $25 mil would get to break even. I contend that they could reach break even tomorrow by simply normalizing R&D spend with their peer group at 8-10% of sales. Take an annual revenue target under current conditions of $84 mil.. Apply a 40% gross margin and you are looking at $33.6 million gross. The lowering of R&D down to 10% of sales gets your Opex down to approximately $8 mil per quarter oror. $32 mil/yr. And there you have it....break even.

    It's a puzzling move for the company to continue to spend over $17 mil in R&D on just over $80 mil in sales. I could clearly understand this spend if they anticipated $150+ mil in sales, but that is not what we are anticipating.

  • Reply to

    Insider Buy Tom Minichiello

    by phennes591 Jun 1, 2015 1:50 PM
    aurorainsider aurorainsider Jun 1, 2015 7:35 PM Flag

    There is no mistaking this one. Your CFO buys 20k on the open market. I wonder who knows how the finances really look? Some goofs (with questionable motives on this board)who claim bankruptcy or the CFO of the company who has visibility to the business after two months of a quarter?..

  • Reply to

    Liquidity Becoming A Big Issue In Many Stocks

    by phennes591 May 28, 2015 10:16 AM
    aurorainsider aurorainsider May 28, 2015 6:44 PM Flag

    Phenne.....you just have zero institutional interest in WSTL right now. They are all just waiting for two things: the telco spending cycle to normalize and proof that Westell is again growing. Until both of these conditions are met, you will continue to see this ultra low enthusiasm for the stock.

    I guess that on the bright side, there has been no institutional selling of the stock since the Russell rebalancing at about this time last year. Watching the paint dry.

  • Reply to

    Northland Securities

    by phennes591 May 27, 2015 3:49 PM
    aurorainsider aurorainsider May 27, 2015 9:13 PM Flag

    I have some experience on the M&A front. The stock grants(RSUs or Options) typically vest in their entirety at the time of the acquisition completion.

    I still don't think that you need to confuse lucrative incentive packages as a sign of M&A activity. It is any executives responsibility and desire to see the stock price move higherf. This price certainly does not need to be tied to any acquisition to be lucrative. It can be just old fashioned strong management leading to strong performance and share price appreciation. I would think that Grünewald and team would rather see an $8 share price due to strong sales as opposed to a $5 price based on an acquisition.

  • Reply to

    Northland Securities

    by phennes591 May 27, 2015 3:49 PM
    aurorainsider aurorainsider May 27, 2015 8:26 PM Flag

    I think the option structure vs. RSUs has nothing to do with M&A. Rather I believe it is an attempt to provide an incentive for the key players to stick with the organization during the next few years. Again, companies will offer far more options than RSUs. In Westell's case, this sweetens the potential upside should Westell get back over $4/share. What would you rather have right now? 10K shares or 30K options with a strike of $1.18??

  • Reply to

    Northland Securities

    by phennes591 May 27, 2015 3:49 PM
    aurorainsider aurorainsider May 27, 2015 7:09 PM Flag

    Phenne...you are reaching here. This same disclosure has been included in several of the Northland reports on Westell. Actually, although the ratings from the analyst are supposed to be independent of the IB business, you often wonder why someone like Mike Lattimoore had outside price targets on Westell between $8-$10/share as recently as March of 2014 only to now have a $2.25 target. It certainly makes one wonder if the ratings and IB are really independent. Would Westell management even consider doing IB with the same firm that trashed its stock???probably not.

  • aurorainsider aurorainsider May 22, 2015 9:30 AM Flag

    The stock looks very tired. This was the least amount t of trading volume on an earnings release that we have seen since 2012. It looks like sellers and buyers are in a wait and see phase. With Q1 earnings only a couple of months away, there is no real reason to add or decrease ones position given she is selling at an EV of around 0.30.

  • aurorainsider aurorainsider May 21, 2015 6:36 AM Flag

    Phenne Your expectations are awfully low then. I would have like to see at least $20. If you look at the legacy Westell business, you would expect between $33-$35 in annual sales. The expectations for CSI were in the range of $35-$40 to start. As for Kentrox....??? Given the R&D investments over the past couple of years, one would anticipate some ramp in sales. Gruenwald mentioned two "game changing" product launches on his introduction call. It looks like we are about to see one of them. Hopefully the recent ISM product was not the other one. From my perspective, the sales should be 50-70% higher than what we are seeing today. As the industry begins to see increased spending in the second half of the year, anything below $25/qtr(ironically break-even), would be a miss in my opinion.

    Let's see what we get today in terms of tone and direction during the call today. We'll get a nice glimpse on Gruenwald's management style both of the company and of the Street

  • Reply to

    Patrick J McDonough jr

    by aurorainsider May 5, 2015 8:59 PM
    aurorainsider aurorainsider May 11, 2015 7:44 PM Flag

    Thank you. I figured it was something like that. I wonder why the change now?

  • With today's announcement, it sure looks like Skurla is out since the title is the same. So Grunewald is shaking things up. Perhaps we can actually begin seeing some international sales development for once

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