Suppose political instability isn't necessarily the right description. That can be a problem but the bigger concern is a stable government that outright steals as both Argentina and Venezuela have been known to do.
Have to worry about South America. Currency risk in Argentina and Venezuela is significant but you also have to worry about collection risk due to political instability. Brazil might take a break in investment too with the World Cup coming up.
I think CRNT is going to announce new investment initiatives but they are going to need them to offset losses in SA.
Normally I'd say that the goodwill and other intangible assets needs to be subtracted for a company blowing through cash like this one and stop. Here though you have a company that simply isn't able to sell their product for much above book value as an operational business. Bottom line, the inventory is overstated too.
Hey, their receivables don't have much collection risk. That is something positive.
That is the $64,000 question. There really hasn't been any positive news other than the possibility of an electric rate reduction. Weird how company shares will take off for no real reason other than a few people deciding they want to buy it. Where were they six months ago when things were pretty much the same?
That is probably just about what I think but it is conceivable CRNT sees $2.50 before then if they have a big receivable go bad or currency issues are worse than what I'm guessing.
In a normal financial environment I would say 12 months for DRWI but someone will either give or continue to extend credit so 36 months is probably a good guess.. I would be willing to bet that if we had access to NSN's books we might that they have already written off the $10 million DRWI receivable.
I referenced an actual transaction from a time when valuations and business prospects were much higher. Google Nero and Ceragon. Also based on analyst comments which I believe to be accurate and finally just experience.
Greedy is right when he talks about the OEM business. There is nothing wrong with that type of a business per se provided your costs are extremely low but they seem to have a high cost model with no real prospects of turning things around on a sustained basis in my opinion. Companies like this can hang around for years but I'd like to see them go away or if not at least shrink to some niche (assuming they have one) where they can make money. They can't hope to shrink that small as a public company and as I said, I'm not sure a niche exists in any event.
Should also add that it is important to consider where DRWI appears to be in the market. They are merely a spoiler trying to extract capital from others. Their odds of actually creating a profitable business are virtually nil.
No one like GE would buy them. Private equity would buy it at a low price. Best case scenario would be a competitor.
Look at what Ceragon paid for Nero. Only $48.5 million for a larger company that was admittedly blowing through a lot of cash. It might take $20-$30 million to get a deal unless Ceragon's share price were to increase significantly as that would make doing a deal easier. Without a bump in a competitor's share price it might take under 40 cents a share to get a deal done.
I don't see how they can possibly get to a true break even. Maybe if they buy another NSN deal and create earnings right out of thin air by arguing they got a "bargain purchase."
My thinking is that their hope is to get bought out at some point in time by a competitor.
Suppose it is conceivable it is driven by the Barcelona conference.
Hope the potential negatives out of South America are fully priced in but I tend to think not. What would happen if they all of a sudden had to write-off a large receivable from a Venezuelan or Argentinian company? I'm not saying it is going to happen but it is very conceivable.
Auxilium is ramping efforts for Stendra plus they have some deferred revenue. Pretty sure they will get a milestone payment in the first quarter too as the FDA approved the change in prescribing information.
Hey I don't claim to know anything about this company but I don't think revenues are going to fall off of a cliff.
True but just to be obnoxious DRWI is realizing a benefit of never having been successful in South America. They don't have to worry about currency devaluations and controls like Ceragon. Ceragon is having to deal with a number of difficult (some positive) issues while DRWI appears to simply continue to get the tar beat out of them.
I don't know much of anything about this company but I read the document and they are talking about a restructuring and it will either be a pre-packaged bankruptcy or something similar. They also got a new CFO for one of their subsidiaries.
The banks are obviously in control. Just a question of what they do with it.
How bad is it? I certainly underestimated the impact. $130 million in receivables at December 2013 and well over 50% is attributable to South America. What portion is Argentina and Venezuela?
What was the $3.3 million cost to getting the cash out of Argentina? Will it recur?
How did they realize a $3.1 million cost for Venezuela in the December quarter when the currency (at least officially) did not devalue until 2014?
Share price has certainly under-performed the market recently. Probably with good reason given the problems in Argentina and Venezuela. We know 40% of sales last quarter were in South America but we don't know how much in those two countries. We also don't know the assets residing in those locations.
Did you see the Colgate press release on the impact of Venezuelan devaluation? It is safe to say that relative to company size Ceragon has far more exposure. Then again, I suppose it is possible that they have more flexibility than a consumer goods company.
Brazil has been reporting bad economic news too but nothing terrible like Venezuela and Argentina. Longer term Ceragon should be good but it could be a really ugly three to six months.