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Assured Guaranty Ltd. Message Board

cohsgrad 182 posts  |  Last Activity: Jul 28, 2014 3:31 PM Member since: Feb 27, 2000
  • Reply to

    The Beginning

    by compression_99 May 28, 2014 7:59 AM
    cohsgrad cohsgrad May 28, 2014 8:35 AM Flag

    Why have they struggled so much with sales and even the few sales that they have had were the result of buying the business by taking liabilities off of NSN's hands?

    I'm not saying where the share price is going. I'm just saying that DRWI is ultimately going to fail to deliver anything to shareholders. They will likely issue some shares to suckers and continue to operate for many years to come while never delivering anything of value to shareholders except for a few empty press releases; this is what they do.

  • Reply to

    New Analyst Coverage

    by tdmiata May 23, 2014 9:10 AM
    cohsgrad cohsgrad May 25, 2014 12:26 PM Flag

    Do you know that the commission to Nokia is 15%? That is about what I would have guessed if I were forced to put a number on it but I figured it was more complex than that.

  • cohsgrad cohsgrad May 23, 2014 5:13 PM Flag

    Was reading through some of their regulatory documents today. They are cutting it close on cash too although they have some cushion. It looks like they have maxed out the credit line although they do have the right to sell $40 million in receivables so they do have that. Still, I think CRNT will come to market with shares in one of two ways:

    1) Tough quarters. Their covenant says their adjusted EBITDA will be no less than $3 million in the second and third quarter. Now granted they can probably obtain a waiver if they miss that mark but I would be starting to worry in that situation and they might just have to do an equity issuance.

    2) Good quarters. Even if things work out in the third and fourth quarters they have just burned too much cash. They will likely do an issuance by early 2015 or late 2014.

    Do you know who the big Indian customer is? I think it has to be Reliance Jio Infocomm Group. They specifically reference that company in their debt agreement. At least Ceragon provides copies of the debt agreements unlike Dragonwave.

  • Reply to

    New Analyst Coverage

    by tdmiata May 23, 2014 9:10 AM
    cohsgrad cohsgrad May 23, 2014 4:57 PM Flag

    Unless they have some monstrous contract waiting in the wings I don't see how they could do $1. The last offering at around $1.20 was done at a time that the share price was around $2.50. Know I am a broken record but they tried to make it sound like it was at $2.10 by using the units which bundled all sorts of dilutive rights with the initial shares.

    Assume 50% of $1.20 and you get around $0.60 which also happens to be right around book value. Obviously I'm guessing but I think it is a probably a pretty good guess as I'm coming at that price from multiple approaches.

    All a probabilities game. Where it comes out, I don't know.

  • Reply to

    New Analyst Coverage

    by tdmiata May 23, 2014 9:10 AM
    cohsgrad cohsgrad May 23, 2014 9:54 AM Flag

    This is a typical example of how non-rigorous most analyst reports are. They picked out one invalid measure to value the shares because it delivered the story they wanted to tell.

    It is about cash flow and while sometimes sales can be a reflection of future cash flow prospects, although only rarely, here it is particularly bad because you have a company earning extremely low margins and benchmarking against others who earn more normal margins. The two big valuation measures they ignored in that report are DCF and book value.

    Maybe they will get some fees when DRWI comes to market with a new equity offering?

  • cohsgrad cohsgrad May 22, 2014 6:37 PM Flag

    Last point, I do think they can borrow against the receivables even if they have to renegotiate terms to do so. Contrary to what they say, they have not had outstanding support from Comerica. $15 million in LOC with $10 million min cash secured by $15-$25 million in receivables? I'd give them more than that provided I was secured properly, the return sufficient and no tax issues.

    That means, they probably get out to Sept/Oct before the odds of bankruptcy or equity offering go significantly above 50% Probably closer to 70-80%

  • cohsgrad cohsgrad May 22, 2014 6:25 PM Flag

    Actually, I can only name two times they went to the edge of bankruptcy. The first time, Nokia let them out from under the deal they negotiated (and advanced $13-$14 million) and the second time they did the equity offering. Maybe third times a charm and they finally go under or sell out but I doubt it.

  • cohsgrad cohsgrad May 22, 2014 5:49 PM Flag

    Yes, I don't think anyone would deny that they are getting very close to the edge again. They acknowledge this in the MD&A and it wasn't just boilerplate language. They would have received a going concern audit opinion were it not for the ability to raise additional cash via equity offerings.

    The way I view it.
    *They went down to $10 million in cash at May 2013 before doing an equity offering. They were very distressed at that time and talked of selling out but instead they did that equity offering with full ratchet provisions that resulted in selling shares at roughly $1.20 a share when you look at shares, rather than the misleading "units" they used in press releases.

    *They have $19 million in cash as of February 2014. Sure it is lower now as they projected $7 million in burn for the May 2014 quarter. They indicated they hoped to increase the credit line this quarter and I expect they can but it isn't obvious that they will because they were maxed out at $15 million in previous quarters when results were comparable to what they are projecting for May quarter in terms of sales. Hope that makes sense but they are projecting sales of $27 million, that is less than Feb 2013 quarter and prior quarters when they were maxed out at $15 million. Where is the additional capacity? Maybe it is there but I don't see it.

    *They owe a contract termination fee of $9 million to Nokia. They previously said, payable in 2014 but now they say 2015. I have no idea what the terms are but if Nokia demanded payment, DRWI would immediately have to file bankruptcy. Given this, they probably won't demand payment and who knows, maybe they forgive it? I don't think DRWI is on top of it.

    Very close to the edge. I think they plan to do an equity offering after quarter ended May so probably June/July time frame. If they can't do it by then, it gets really risky but they have taken it to the edge plenty of times in the past.

  • cohsgrad cohsgrad May 22, 2014 11:03 AM Flag

    Restricted stock is basically a grant (free) of shares. They typically vest over a period of time so if the employee left after six months they would be forfeited.

    Many similarities to deferred cash compensation but it is in the form of shares. Restricted stock is more popular these days for a couple of reasons. Some people say it is because regular stock options aren't really related to performance because if the S&P doubles and the price of a share increases by 50% you have underperformed. If the stock market goes down, chances are the share price goes down and executive gets nothing. Restricted stock gives the executive ownership and an incentive to stick around. I tend to like restricted stock more than big cash bonuses.

    Only thing I would do differently than what most companies is that I would place a long-term ownership requirement on the shares, say hold them two or five or ten years beyond vesting. There has been talk of doing this on banks but no one has actually done it.

  • cohsgrad cohsgrad May 20, 2014 11:17 AM Flag

    Knowing Tim McDonald's situation is important. Was he emotionally attached to the company?

    Hate to be rude but I'm pretty sure he is old. Is his health o.k.? If someone else took over his affairs, they would likely want to reduce the position but it would be tough to do without crashing the shares. Maybe he is healthy and has enough resources to prop up the share price for many years or even advance funds. I don't know, but a rich guy who is emotionally attached to a company might just do these things.

  • cohsgrad cohsgrad May 17, 2014 9:52 PM Flag

    Sub par player in a sub par niche yet the stock market values it very highly. Wild.

  • Reply to

    Results

    by cohsgrad May 14, 2014 5:20 PM
    cohsgrad cohsgrad May 15, 2014 5:11 PM Flag

    Yea I'm long CRNT. Regretting it but I'm planning to hold for another six months. They have the best management of the small specialists but in the end it is an extremely competitive environment. Venezuela and Argentina really hurt them over the last few quarters. They won't have exchange losses for Brazil but with the world cup being here, I think sales in South America are going to weaken further. They have to get some other big deals in order to drive to profitability. Maybe it will happen, maybe it won't.

  • cohsgrad cohsgrad May 15, 2014 4:58 PM Flag

    Was that guy posting on this board? There used to be so much useless noise here that I just couldn't read it but I do remember a guy saying he held millions of shares. Some of the big shareholders have an incentive to "paint the tape" in hopes of keeping the share price up for the next equity issuance.

    Oh, one thing. The last MD&A said that only 8,000 shares were purchased under the ESPP even though a 25% match was provided. That does not speak well in terms of of how the mid-level managers think of the company. Still, there are always suckers out there ready to buy the shares in companies like this.

  • Reply to

    Not nearly low enough

    by cohsgrad May 15, 2014 4:16 PM
    cohsgrad cohsgrad May 15, 2014 4:43 PM Flag

    It is tough to say. Over the short-term prices don't reflect reality and even over the longer term I'm not sure any of them can make money.

    CRNT is the only one who has done an acquisition that wasn't an absolute disaster although Nera was pretty bad. Maybe they could integrate their products and the best people from AVNW and DRWI. It probably wouldn't work but what they are all doing now is not a recipe for success. CRNT might be able to survive a long drawn out fight to the death but if they all stay in business, it is just too much competition to hope for long-term profitability.

  • Reply to

    was wrong - taking the loss here

    by hageneriksson May 15, 2014 3:55 PM
    cohsgrad cohsgrad May 15, 2014 4:25 PM Flag

    Absolutely right. Every action brings risk and the potential for disaster. Hard to walk away and take the loss especially on a micro cap with little liquidity but that is usually for the best.

  • Reply to

    was wrong - taking the loss here

    by hageneriksson May 15, 2014 3:55 PM
    cohsgrad cohsgrad May 15, 2014 4:18 PM Flag

    ZHNE has been absolutely pounded. I've used that as a bubble meter. Still can't say it is cheap but it is much more reasonable.

  • They have over 58 million shares outstanding which at a share value of $1.1 indicates a market cap of $64 million. They have roughly $41 million in equity and they just told you that they are going to continue to burn substantial amounts of cash. Folks using $35 million market cap and dividing by 58 million shares you get 60 cents a share.

    They were "puffing" all over the place in that call. There were far more half-truths than full blown truths. Only an idiot would trust them and only an idiot would buy the shares without reading the MD&A on Sedar. They trade at a significant premium to book value when their prospects are worse than their competitors.

    AVNW has cash of $47 million, equity of $115 million and a market cap of almost exactly the same as DRWI or $64 million (61.3M shares). Yea they are going to burn a fair amount of cash going forward but at least you wouldn't be a sucker for buying their shares as the price is cheap and they might be able to sell for more than they are currently trading at.

    CRNT has cash of $26 million and they are going to generate a fair amount of cash in Q2 due to a one-time settlement. They will be at roughly break even on an operating basis and they are done taking losses in South America (I think anyway). They have equity of roughly $110 million and 52.5 million shares outstanding. Use $120M equity given the built-in-gain they have and you get roughly $2.28 per share.

    Why on earth would anyone buy these shares at $1.10 a share? I would start to think about it at 60 cents and wouldn't pull the trigger even at that level but there are lots of people just looking at a chart and saying well it surely can't go down more, they are wrong but there you go.

    I think the best outcome for all parties is a negotiation where CRNT provides stock to AVNW and DRWI shareholders and puts a pile of money in front of both parties CEO's to prevent looting of the companies following the integration. What I think anyway.

  • Reply to

    Was the offer for 3.75 USD or 3.75 Ler?

    by guy.freecycle May 14, 2014 10:38 AM
    cohsgrad cohsgrad May 15, 2014 11:49 AM Flag

    The whole thing was a fraud. If Tower was a multi-billion dollar company it would be investigated and the SEC would issue a letter warning investors but they aren't and the perpetrators are in Eastern Europe so it will be ignored.

  • cohsgrad cohsgrad May 15, 2014 11:38 AM Flag

    C'mon guys, you should show some backbone and say, "you were right and I was wrong."

  • Reply to

    conference call

    by hageneriksson May 15, 2014 9:51 AM
    cohsgrad cohsgrad May 15, 2014 11:35 AM Flag

    If you report a 20% decline in revenue off of an awful quarter it gets easier to report improvement.

    They didn't discuss the $9 million they owe to Nokia Networks which they have previously said they are going to pay back this year. Have you ever seen this agreements terms in a regulatory filing?

    I've not seen it but I think it is probably payable on demand which given Dragonwave's situation is kind of the equivalent of saying you demand payment, we file bankruptcy so don't demand it as you aren't getting paid unless our business situation improves.

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