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Brightcove Inc. Message Board

ddbikessamsara 19 posts  |  Last Activity: May 23, 2016 11:03 AM Member since: Oct 5, 2004
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  • Reply to

    DOCSIS 3.1 & 100G Datacom

    by bulbhead2711 May 5, 2016 10:01 AM
    ddbikessamsara ddbikessamsara May 5, 2016 11:29 AM Flag

    I agree - AAOI seems to be poised for significant growth over the next few years. This "hiccup" is typical of any business in the transition phase where older products are slipping a bit and the newer stuff has not yet ramped in a big way. The marker makers are doing their usual dirty work, knocking the price down with the endless 100-share head fake trades. Hard to ever call an absolute bottom for that reason - they can ALWAYS generate another 100 shares at an artificially low price, or some sucker sets a stop loss so low the MM's can't resist walking the price down to capture it.

    Regardless, given the price destruction over the past couple of weeks and the future looking extremely bright it seems a great entry point here. Very cheap on most standard measurements - PE, price-to-sales, price-to-book. Chart shows it rebounds quite rapidly when the reversal occurs and there have been only a few weeks out of the 2 years of public trading the stock has been this cheap. I've been buying on every successive dip and look to hold for a couple of years as the 100G transition really kicks in.

    The call will clarify the reasons for the quarterly "miss" and my bet is the guidance for next Q should be decent and getting better with each quarter the rest of this year and beyond.

    Sentiment: Strong Buy

  • ddbikessamsara by ddbikessamsara May 11, 2016 12:06 PM Flag

    This is nothing more than the age-old game. Every stock in the history of markets goes up and down depending on the whims of the moment. Simple test : pick at random ANY stock you can think of. Check the difference between the 52 week high and 52 week low. With stunning regularity you will see a 50% (or greater) difference between the high and low. None of this has anything at all to do with the true underlying value of the business - it is all just noise, market maker tricks. options strategies, you name it. You have to either be a nimble trader taking profits on any move or a long term investor willing to ride the wave of up and down to make money in this market (or casino - you choose the term)

    There was no way AAOI could sustain infinite growth rates of 60% every single quarter, particularly when there is a very clear transition occurring between 40G and 100G. 40G is coming into the twilight of it's life and 100G is not yet taking off in a major way - impossible for there not to be a few quarters of slower growth in the transition period.

    Meanwhile, the gross margin is impacted for that very reason - they have to be ready for 100G so have devoted R&D to re-engineering THAT product for lower cost going forward. 40G actual demand for some products was more than they expected so they had to produce some at a higher cost to satisfy the customer -which is smart business. You cannot risk losing customers and reputation to "make" a quarter to keep the analysts happy.

    Long term they have done exactly what they needed : kept customers happy and got the cost of the 100G into the sweet spot. When that curve kicks in, most likely late this year and continuing through the next few years, they will be reporting excellent margins and associated earnings. Not their fault the 100G chipsets are not yet widely available - all they can do is control their end of things and it appears they have done that. This is a 2017-2018 story and now is the time to buy and hold.

    Sentiment: Strong Buy

  • Reply to

    So what exactly happened?

    by bulbhead2711 Apr 21, 2016 4:14 PM
    ddbikessamsara ddbikessamsara Apr 21, 2016 6:05 PM Flag

    I don't think much happened except the same stuff that happens to ANY company when the market is obsessed with quarterly performance. Name a single company in the history of the world that has not "missed" a quarter. Product lines change, transitions occur, lots of stuff happens all the time to real companies in the real world that make the precious analysts wrong with their precious models all the time.

    When these big selling waves begin they kind of take on their own momentum, and the market makers gladly help out by plunging the ask to shake out as many suckers as possible. Shorts smell blood and pile on to make a few bucks. NASDAQ is entirely a market maker based system and all shares are coming from a market maker somewhere. It is ALWAYS in their best interest to buy inventory as cheaply as possible so they do everything they can to walk the price down, pick up cheap stop losses etc. These big plunges tend to drive margin call selling as well - it happens all the time, over and over again. This is just another classic example of the same pattern repeating itself. Hard to ever call the exact bottom but usually buying a quality stock after one of these crazed short-sighted sellloffs has been a pretty good move. The company has stated they expect the transition to 100G and DOCSIS 3.1 to begin in earnest later this year so picking up a position here and holding should be a good move with any patience. It may still drift lower since a lot of buying interest will probably be on hold until the call gives more clarity but I bought yesterday and today and plan to hold for a couple of years. 100G is clearly the next big upgrade cycle for data centers as is DOCSIS 3.1 for cable operators. AAOI is very well positioned to ride the wave - what's happening this quarter is largely irrelevant except as a trading point. Look at the chart - the stock has only been this cheap for a few weeks in late '14 early '15.

    Sentiment: Buy

  • Reply to

    Just In! JP Morgan downgrade is $8 at worst!

    by ek1971ontario May 13, 2016 12:17 PM
    ddbikessamsara ddbikessamsara May 13, 2016 12:57 PM Flag

    Price targets are almost always wrong, and change as frequently as the weather, and ALWAYS after the fact. I have never seen the mighty analysts change any information until AFTER a major event occurs. A Magic 8 ball is a more reliable indicator. Use your own judgment. A 50% drop for a 10% "miss" in guidance which is only a best guess to begin with? The market remains as large as ever and will grow even larger with the hip implant product. I can guarantee you if I was looking at a knee replacement I would choose a ConforMIS product - why would I want to do anything else when it is proven to be much more effective with much less chance of complication? These guys can corner the market in a few years. Just buy it and hold it - no reason at all this can't get back over $20.

    Sentiment: Strong Buy

  • Reply to

    DOCSIS 3.1 and DataCentre 100G

    by doublebakedpotato May 18, 2016 6:19 PM
    ddbikessamsara ddbikessamsara May 18, 2016 9:07 PM Flag

    I would respectfully disagree. They HAVE proved they can earn money and were nicely profitable until the most recent quarter. They have clearly been caught in the middle of the transition where the bulk of their R & D has been devoted to re-engineering the 100G products for maximum cost savings. They do have limited facilities and limited capital so they have to make the decision and live with it. They have mentioned many times now that they expect to fulfil the 100G demand at much better margins and have devoted resources accordingly. Unfortunately different 40G demand unfolded at more than they had originally thought so they had to manufacture more to make the orders but at a lower margin. I don't think this is going to last long, and they will get back to past levels of profitability and better when the transition begins in earnest. Buying and holding here should be a very prudent thing if one can hang on for a couple of years. By then almost all sales will be 100G and that is what they have geared the operation for.

    As to keeping the customers happy more than the investors? That makes no sense at all. If you don't keep the customers happy there will be nothing but broke investors because there will BE no customers and consequently no sales. All Amazon has EVER done is keep the customer happy and wow - have the investors ever benefitted from THAT. We should be so lucky with AAOI.

    Sentiment: Strong Buy

  • ddbikessamsara by ddbikessamsara Apr 22, 2016 3:34 PM Flag

    Just reviewed the corporate presentation again (page 9 of the presentation on the website, in the Investor Relations section, presentation dated 3/7/2016). It's pretty clear that 2016 is expected to be a fairly modest year for 100G products and the company is smack in the middle of the transition. No big surprise that margins are a bit down since they are selling legacy stuff and the initial wave of 100G demand has not really kicked in yet. But looking ahead to 2019, 100G is projected to dominate with 40G virtually disappearing. Analysts (always taken with a grain of salt but nonetheless the market seems to value their opinon) are calling for earnings in 2017 of $1.61 per share. Slap a PE of 20 on that and it's a $32 stock. What about 2019 when 100G is running everything? Buy and hold - this has the potential to be a monster gainer over the next few years - forget the quarterly madness.

    Sentiment: Strong Buy

  • Reply to

    seems ripe for takeover

    by amigdola May 12, 2016 6:49 PM
    ddbikessamsara ddbikessamsara May 16, 2016 5:09 PM Flag

    Broadcom bought CyOptics 3 years ago for $400 Million in cash. CyOptics was doing about $200 Million in revenues at the time. Very similar to AAOI and being that the 100G cycle is almost underway in a big way there could very well be some potential acquirers looking at AAOI. If 2x revenues was the price for CyOptics that would seem to be a realistic buyout price for AAOI as well. $400 million is $23 per share roughly. Safe to say a $20-ish price is realistic. I think it can get there on it's own once the new product cycles kick in over the next year but a buyout is always possible as well. Way undervalued here under any scenario.

    Sentiment: Strong Buy

  • Reply to

    SA article is a complete farce

    by ddbikessamsara May 19, 2016 6:04 PM
    ddbikessamsara ddbikessamsara May 19, 2016 7:55 PM Flag

    Virtually every company in the universe has some form of potential overhang from the same sort of situation. Unconverted warrants, options, other convertible securities are as common as dirt. Similar language as to the excluded items is also as common as dirt in the 10-Q disclosures. Nobody has any obligation to disclose WHEN the items are physically converted to common shares.

    If you actually wrote this "article" I would be hanging my head in embarrassment rather than holding myself out to be the savior of unsuspecting investors. Anyone with any sophistication knew all about this way before your completely false and shrill screams of company shenanigans hit the garbage can of Stinking Alpha. You are a charlatan lying short seller, not an "author" as you hold yourself out to be.

    There was NO dilution that was not clearly disclosed. Go haunt some other company that has convertible debt or warrants or stock options that will eventually turn into common shares - their stupid and gullible investors surely need you. How many other companies that you have no financial interest in whatsoever are you trying to save?

    I'm done, because trying to wear down a bashing liar has no end to it and I am not going to waste my time.

    Sentiment: Buy

  • ddbikessamsara by ddbikessamsara May 19, 2016 6:04 PM Flag

    The author is falling all over himself trying to paint the company in a negative light because there are suddenly more shares in the outstanding column, as if this is sneaky and underhanded. From the recent 10-Q :" For the period ended March 31, 2016, the Company has excluded 899,574 options, 2,997,000 warrants outstanding, notes convertible into 3,194,279 shares of common stock, and Series B preferred stock convertible into 1,506,024 shares of common stock because their impact on the loss per share is anti-dilutive."

    So there has ALWAYS been the overhang that some of those previously un-issued shares become outstanding as these various items get converted to actual outstanding shares. Always been there, fully disclosed in black and white on the official SEC document.

    Now that some of those shares HAVE converted and the share count has gone up the author is going full bore trying to accuse the company of unethical behaviour. It is complete nonsense, this has ALWAYS been disclosed and many other companies do exactly the same thing. That is what is called fully diluted share count - it takes into account ALL possible additional shares from exactly the same things (options, warrants, convertible debt etc.) the company has disclosed very clearly. How Stinking Alpha gets any credibility escapes me - this article is a classic mis-information head fake and the "author' goes to great lengths to state he has absolutely no position and no intent to take any position in the stock. I guess they figure (correctly) that most readers are far too lazy to actually do any research on their own and this is why these "articles" have any impact at all.

    Sentiment: Buy

  • Reply to

    Age-old game at work

    by ddbikessamsara May 11, 2016 12:06 PM
    ddbikessamsara ddbikessamsara May 11, 2016 8:24 PM Flag

    From the 10-Q: "Our vertically integrated manufacturing model provides us several advantages, including rapid product development, fast response times to customer requests and control over product quality and manufacturing costs. We design, manufacture and integrate our own analog and digital lasers using a proprietary Molecular Beam Epitaxy, or MBE, fabrication process, which we believe is unique in our industry."

    Their process IS proprietary (they have a lot of patents) , and obviously very robust and reliable or they would not have Amazon and Microsoft as their biggest customers. It's remarkable that a small company could land customers like that. They have stated repeatedly that the 100G margins are well above the current quarter's and they have made good profits with 40G before the recent "glitch" causing the margins to drop a bit. Looking out a couple of years 40G will basically be nil and almost all their sales are expected to be 100G at better margins. Major growth in 100G, new Docsis 3.1 cycle beginning also. It seems likely they will easily get back to profitability with the new product cycles and higher margins. It also is not farfetched to see a buyout of the company - lots of people have to see these upgrade cycles coming and see AAOI as a significant player in the cycle.

    Nothing's for certain in the market but buying a quality company at historic lows with excellent future prospects is usually a good decision. I've been buying and look to hold into 2018 at least.

    Sentiment: Strong Buy

  • Reply to

    This is a no brainer, I'm in !!

    by jenocash May 13, 2016 4:06 PM
    ddbikessamsara ddbikessamsara May 13, 2016 8:49 PM Flag

    Absolutely. I could not believe my eyes when I looked to see "the news" that would cause a stock to drop 50% in a single day. I figured it had to be a real disaster. Just a reasonable guidance adjustment of about $8 million in revenues over 2016. That's it. Nothing else has changed. Future is bright, products are phenomenally effective, demand will easily grow as more and more word gets out - . Just go to the website and check out the videos of the surgeons who are using the products - they are raving about how they are the best they have ever, ever seen. The CEO is only "moving aside" once they get a CEO who can help take this hyper growth company to the $250-$500 million sales level and beyond. He's not going anywhere until they find the star candidate who can do that - he's happy to stay as long as it takes. Very much misconstrued that the CEO is bailing out.

    So basically due to an ESTIMATED guidance adjustment - which could easily be re-adjusted upward - of $8 million the stock loses over $200 million in market value. Incredible - this could quadruple easily from here over the coming year or two. Gotta love it when market insanity throws a gift like this at you.

    Sentiment: Strong Buy

  • ddbikessamsara ddbikessamsara May 14, 2016 12:23 PM Flag

    Agree. They already have proven test results clearly demonstrating the superiority of both joint function and patient recuperation times, and even more studies underway. I really don't see how anyone would choose anything OTHER than a customized replacement with this knowledge. I most certainly would demand it if I needed the procedure (which I most likely will - my knees are getting pretty bad). It really leaps out at you when you go to the website and see the surgeon interviews from doctors who have used the various products. They are well into develpopment with the hip replacement product also - probably see that introduced next year. They have a huge number of patents - it will be pretty hard to get around them all so as you mentioned one of the bigger fish could well buy them out just to get the IP and enhance their overall competitive position.

    These situations always amaze me - who in the world would sell at a gigantic loss after a single light quarter when the long term picture has not changed an iota? I've scrubbed through the PR's and conference call transcripts - I just can't see anything but net positives. People seemed to love the stock at $15 and above and now trip all over themselves trying to get out at $5 when nothing has changed? Crazy. Buy it here and hold - great IRA investment.

    Sentiment: Strong Buy

  • ddbikessamsara by ddbikessamsara May 13, 2016 3:35 PM Flag

    How can a product customizable to fit your specific anatomy, and already proven to provide superior results both in functionality and recuperation time NOT grab a significant chunk of that? A mere 2% is $300 million in sales, which alone will make the company wildly profitable. This price is a gift you don't get very often - I have never seen a stock cut 50% in a single day for anything less than a death knell scenario. I can't see anything wrong here other than a temporary pause in growth rate due to the lingering effect of the recall last year - which itself was not anything really terrible, just an abundance of caution. Long term looks as good as ever. Gotta love the quarterly fixation madness of the market - without it one would not get this sort of buying opportunity.

    Sentiment: Strong Buy

  • It appears the 100G main wave is getting delayed for a quarter due to shortages of the new chipsets required for the switches needed before the AAOI Optics can be deplyed. Doesn't appear to be any decline in the long term trend to 100G but it opens up another quarter of waiting and the market does not like to wait. The analysts will be updating their precious models after the Q2 guidance being lighter than expected. Could be some exceptional buying points in the coming weeks. I thought low $10's was enticing, there will be better prices coming. Hold through 2017 when the 100G cycle will be in full swing. They are prepared operationally, just have to wait for the orders to catch up.

    Gotta like this :"We believe the upgrade to 100G in the datacenter will be one of the largest upgrade cycles in optics to date, and we think the actions we took in Q1 position us well to maintain our leadership in cost and performance throughout this market transition.”

    I expect to be underwater on my buys short term but way ahead by this time next year. Pretty hard to second guess the casino market we have to live with short term but AAOI has all the earmarks of a big long term winner at these prices.

    Sentiment: Strong Buy

  • ddbikessamsara ddbikessamsara May 23, 2016 11:03 AM Flag

    100G is projected to grow at a 55% compound rate through 2020. Any guess what the price may be in 2018 when AAOI is doing +$300 million at a +30% margin and earning $2+ per share? I think $25-30 may be realistic by then. Short term is anyone's guess but I agree there will be some sort of spike on a new datacenter announcement - they did say they expect to hear in the first half of the year.

    Sentiment: Strong Buy

  • Reply to

    SA - can someone post it here

    by livingstpr22 May 18, 2016 1:04 PM
    ddbikessamsara ddbikessamsara May 18, 2016 6:03 PM Flag

    Why bother? SA runs neck and neck with Motley Fool for being mostly useless "information". Basically some goodhearted Samaritan with "no position or interest" in the stock publishes a bash article that is strictly their opinion. I can't for the life of me figure out how they get legitimacy but there it is. Once in a while there are good articles there but a huge percentage are just worthless.

    Sentiment: Buy

  • ddbikessamsara ddbikessamsara Apr 21, 2016 12:48 PM Flag

    Given the nature of market makers and their ability to manipulate prices I would say some level of downside risk remains but it does seem an overall favorable entry point. If the 100G cycle and DOCSIS 3.1 seriously gain traction this year the stock could double from here into 2017. Could be a 3-year upgrade cycle underway - the call will reveal a lot. In the meanwhile the MM's will do their thing to get prices as cheaply as they can so don't be surprised to see a few more down days as they continue to fish for stop losses and generally try to walk the stock down.

    Sentiment: Buy

  • Reply to

    Age-old game at work

    by ddbikessamsara May 11, 2016 12:06 PM
    ddbikessamsara ddbikessamsara May 12, 2016 3:13 PM Flag

    Your guess is as good as mine on the ultimate high stock price. I agree with you - don't see why it can't revisit the $20's once the 100G wave really gets underway in conjunction with with the Docsis 3.1 cable upgrade cycle. If they get more big datacenter clients (remember they are in discussions with ALL the big players) they could be showing massive sales growth over the next few years, at significantly better gross margin than this quarter. A buyout is always a possible scenario as well. Broadcom bought CyOptics in 2013 for $400 million when that company was doing $200 million in sales - similar company and similar sales to AAOI. $400 million for AAOI is around $22 per share with the current share count.

    At any rate, it seems the ultimate price should be at least in the $20's but it is hard to see it happening before next year and it is dependent on the 100G cycle unwinding as forecast. Just my thoughts - the price will most likely be range-bound at these levels at least through the summer unless they announce some significant new customer wins. Next call will be in August.

    Sentiment: Strong Buy

  • ddbikessamsara ddbikessamsara May 14, 2016 12:42 PM Flag

    Not sure courage is the right term here. After going public at $15 and establishing the story pretty clearly at this price a huge part of the downside risk has been washed out. The products outclass anything else out there and they have already signed up over 100 hospitals in the Medicare Comprehensive Care for Joint Replacement bundling program. That is HUGE because Medicare will fund a very large percentage of joint replacements and the push will always be to lower costs. Political pressure will be huge to lower Medicare costs and they could easily restrict the process to nothing BUT something like ConforMIS products since they have proven to lower overall costs due to shorter hospital stays, fewer complications etc.

    Sure there could be some more downside - anything is possible in this wacko market but to me the risk/reward picture has changed pretty dramatically after a washout like this.

    Sentiment: Strong Buy

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