2/3 of institutions have reported. Essentially, all institutions of significance maintained, or slightly increased, their exposure to ELON.
Can't post link to Nasdaq's site anymore.
That's the first positive NEWS with material impact that came out from Echelon in awhile.
My target OPEX model was $28 M (currently at $7.422 M * 4 = $29.688 M yearly; some execs already left during Q1/15). If I were to read the following comment of Sege as: "yearly costs decrease by $3.2 M due to lease/building-related actions only," that would change the picture ... at least for now.
Sege says: "... Once the company moves to a new, right-sized headquarters in Q1 2016, both GAAP and non-GAAP savings are estimated to improve by approximately $800,000 per quarter. ..."
If I assign those $3.2 M to OPEX, and leave the gross margin at 55% (I suppose, in reality, building depreciation is allocated to both OPEX and COGS ???), the resulting cost base would be $24.8 M. That'll be a Non-GAAP break even of ($24.8 M / 0.55) = $45.1 M. With ~$ 800K of stock-based compensation a quarter, the GAAP break-even would be ($24.8 M + $3.2 M) / 0.55 = $50.9 M.
I suppose that's the VERY best we could EVER hope for with ELON's current business structure. But even if we add a few $M's, this shrinks the break-even gap to a range that can be filled with an acquisition that Sege can still afford. It also makes the company a bit more attractive for being acquired. Hopes still alive ...
If they were close to break-even, I'd agree. Unfortunately, "debatable improvement" is meaningless at this point. ELON is $20 M short of revenues to break-even, that's more than 50% of existing revenues.
Sege did not point to any idea how to stop his runaway train before entering BK Terminal. The big bummer of this CC was his whining about delays of decision makers for "multi-protocol" support, exactly the same as a few years ago about decision makers in the Grid space ... and that after being more than two years into their legacy migration program. It's not that we expect Echelon to become the market leader in this space with $10's of millions of new revenues, just $2 M from the FT multi-protocol / Bacnet support chip business per quarter would be enough ... his argument is bankrupt from the start.
What happened with the Marvell pump, btw? No mention about it anymore. Gone?
Lighting? Last Q, Sege talked about possible $1 M RFP. Gone? They would need one of those "every" Q for that business to start making sense, I mean just to help close the break-even gap by a miniscule 25%, but they can't even show up with "one" after close to 1 year into the Lumewave acquisition. Let's hope they get one or two soon, which may generate a nice PUMP, but $2 M won't stop the train.
The only thing that could move the needle sustainably is an acquisition. Unfortunately, again, Sege can't seem to find a fitting organization he could restructure to feed ELON's bottom line. Meanwhile, his cash is running low for a meaningful acquisition.
Have you noticed Sege's reference to nearly 100 "IzoT EVK's sold" .... LOL .... 2 quarters ago, he was talking about 250 "FT6000 EVK's shipped" .... very subtle .... like the 100 pilots in Germany.
1) Higher interest payments, and lower stock-based compensation costs contributed to the "in line" results ....
Interest and other income (expense), net ............ 838 .... 11
Stock-based compensation .............................. 157 .... 685
2) He was just talking about "multi-protocol" support won't cut it either, and they're gonna refocus their investments .... sigh .... new strategy seems to be on lighting ....
3) Continued focus on reducing OPEX
4) No stated break-even plan / idea
- Quarter was OK because of increased higher-margin revenues from Enel in comparison to Q4/14
- Outlook does not show any indication of higher IIoT revenues that could close the $20 M break-even gap
Echelon Corporation (ELON) today announced financial results for the first quarter ended March 31, 2015.
Q1 Revenues: $9.9 million
Q1 GAAP Net Loss: $1.4 million; GAAP Net Loss per Share: $0.03
Q1 Non-GAAP Net Loss: $1.3 million; Non-GAAP Net Loss per Share: $0.03
Revenues, which consist of IIoT revenues only, were $9.9 million in the first quarter, up from $9.6 million in the previous quarter, and down from $10.9 million a year ago, including $788,000 of sales to Enel in the quarter compared with $1.5 million in the same period last year.
Echelon’s guidance for the second quarter of 2015 are as follows:
Total revenues are expected to be $8.5 million to $9.5 million.
Non-GAAP gross margin is expected to be in a range of 54% to 56% of revenue.
Operating expenses are expected to be in a range of $7.0 to $7.5 million.
Non-GAAP loss per share is expected to be between $0.05 to $0.08, based on 44.1 million fully diluted weighted average shares outstanding.
GAAP loss per share is expected to be between $0.07 to $0.10.
While I small "pump" all over the place, I certainly appreciate this PPS movement to $1.2 for a split second on 35K of trading, accompanied with some decent trading over the past few days. I take it as a sign that there are still folks behind the scene that lurk for action.
If Sege could further feed this action next week with some half-credible comments as to how they plan to address the $20 M revenue gap to break even, the stock will move back quickly to $1.5 .... if it's half -credible I am out again .... if there is substance to it, I'll wait for $2 .... but investors need _much_ more $$$ related meat than this Mickey Mouse talk about new products.
Looks like those who can temporarily pump up this stock are still trying ..... unfortunately, these product "news" are too miniscule to sustain a pump for longer than a week.
Since both the CEO and the CTO travelled to New York, let's hope/pray they make a meaningful acquisition deal on the sidelines .... I fear only that could mitigate another "in line with expectations" QE in two weeks.
Echelon executives will participate in the following panels at LFI:
Transformation of the Lighting Industry to an Integrated Electronic Platform (Session #L15SM04)
Wednesday, May 6, 8:30 a.m. – 9:30 a.m.
**** Ron Sege, CEO and chairman, Echelon Corp.
Menko Deroos, CEO and co-founder, Xicato
Lighting, Building Automation and IIoT Convergence: Perils and Promise (Session #L15C04)
Wednesday, May 6, 2:00 p.m. – 3:30 p.m.
**** Sohrab Modi, CTO, Echelon Corp.
John Curcio, P.E., LEED AP, chief commercial officer, Cupertino Electric
Jerry Mix, CEO, Finelite Inc.
Noah Goldstein, research director, Navigant Research
Finocchio has not left our sinking boat though ... rumor has it he won't leave his CEO brother Ron Pinocchio, whose nose has grown to a sizable length over the years
Time to do something for Echelon, Mr. Finocchio, where you've been director since 1997.
Nuance Communications, Inc. is a provider of voice and language solutions for businesses and consumers across the world. The Company's solutions are used in healthcare, mobile, consumer, enterprise customer service, and imaging markets. The Company offers accuracy, natural language understanding capability, domain knowledge and implementation capabilities. The Company's solutions are based on the Company's voice and language platform and are used by businesses for tasks and services, such as requesting information from a phone-based self-service solution, dictating medical records, searching the mobile Web by voice, entering a destination into a navigation system, or working with portable document format (PDF) documents. The Company offers its solutions to its customers in a range of ways, including through products, hosting, professional services and maintenance and support. The Company operates in four segments: Healthcare, Mobile and Consumer, Enterprise, and Imaging.
Moley's gone, but I am sure happy about Marszewski's salary increase to $340 K per year .... that's 1% of company revenues :o)
(b) On April 29, 2015, Richard M. Moley resigned from the board of directors (the "Board") of Echelon Corporation (the "Company"). Mr. Moley was a member of the Compensation Committee and the Nominating and Corporate Governance Committee of the Board at the time of his resignation. There are no disagreements between the Company and Mr. Moley that caused or contributed to Mr. Moley's resignation. Mr. Moley has served on the Board since 1997.
(e) On April 29, 2015, the Board approved an increase in the cash compensation for Michael Marszewski, who became our Chief Financial Officer as of April 24, 2015. Effective May 1, 2015, Mr. Marszewski's base salary will be $270,000 per year and his target bonus payment under the existing management bonus plan is $70,000, for a combined aggregate target amount of $340,000 per year.
At least we can conclude from this Echelon's staff hasn't dropped dead in Q1/15. ....
Echelon will showcase its Lumewave by Echelon wireless outdoor lighting control products, aimed primarily at the North American market.
• In the Avnet lighting booth (#666) and the Cree booth (#1657), the Echelon outdoor lighting control demo will feature LED lighting, a Lumewave by Echelon TOP900-TLX wireless lighting controller, and LumeStar software for commissioning and managing the system. Attendees will see dimming and energy management as well as how easily the system is deployed.
• In the Echelon booth (#3373), there will be an indoor lighting proof-of-concept demo showing how building owners can leverage the same Power Line wiring that already exists in a building to control color tuning in LED indoor lighting. This demo features Echelon’s networking control technology and SmartServer smart energy manager, controlled using a low-cost tablet computer.
• Also in the Echelon booth (#3373), attendees will see an outdoor lighting demo using lights from Leotek controlled by the TOP900-TLX controller
With Slakey having left our sinking ship, the chance that Sege will bum out with a meaningful announcement (other than a reverse split to satify Nasdaq) is slimmmmmm.
toolongelonby10 • Dec 6, 2014 1:21 AM Flag
$8 by XMAS. Most likely SWIR bit also could be Camp or CSCO or my old favorite APPL. Huge push behind IOT in next two weeks culminating in ELON take over for somewhere around 320 million--about $8 per share right around XMAS. You heard it here first....
"Sierra Monitor where Axelson and Nagaraj have went would actually be a good fit with Echelon,"
I agree. I posted similar half a year ago. Sierra's market cap is ~$16 M, they have about ~$20 M of earnings, of which go ~$9 M into OPEX, and they make a little profit. To make a meaningful contribution to close Echelon's equity bleed, Sege would need to cut related OPEX toward $5 M, by removing Sierra's management layers, or better by replacing Echelon's management layers with Sierra's, and by consolidating sales and engineering staff.
The problem is, with every quarter of Mr. Sege starring at his feet, Echelon's cash reserves slowly come down to a level where this option moves outside their financial possibilities. It's pretty clear by now that Echelon won't be able to grow their own business organically. So, to close the gap to GAAP break-even, OPEX cutting plus an acquisition seems the only option left for Echelon to break even. If we won't hear about an acquisition soon, a book value sale becomes more and more likely, which unfortunately continues to decline at 5 to 8 cents a quarter ...
"One less person on the payroll."
LOL. I wish I had your capacity of positive thinking :)
- In February, the Chief Operating Officer, Harris, left.
- In March, their marketing lady, Toth, left. Since Axelson and Nagaraj already left about a year ago, it looks like Sege eradicated Echelon's marketing for good.
- Now in April, the Chief Financial Officer, Slakey, left. When a CFO leaves a run-down company right before their "plans" were supposed to come to fruition, it's always been a sign for much worse to come; It likely also means that negotiations to sell the company in the short-term failed; otherwise, Slakey would have waited it out, just to add a line to his resume that he successfully negotiated the sale of Echelon.
Essentially, we can forget about the idea that Echelon has a "business" plan to lead the company _as is_ to break even. It's surprising given the massive LonWorks legacy market they have access to, but that's the way it looks like.
So, what's left of my own positive thinking ... I think it's reduced to Sege continuing his downsizing success story until another company picks up their legacy market for a fire sale price.
Somewhere I read that Nasdaq knocks on the door of non-compliant companies after 30 days (not 100% sure if this is correct). So if Sege can "maintain" a PPS below $1, I suppose he will have to respond to shareholders at the CC. Echelon's shareholder meeting is typically in May as well.
At this point, I unfortunately have to disagree with your assessment of this stock being beaten up. Book value will be around ~90c as of Q1/15, or even lower depending on additional costs for a shutdown or sale of their Holley JV. If we add the $20 M revenue gap to break-even plus the lack of progress in Q4/14, then the current PPS around book value seems just fair. Finally, their cash level is gradually getting to a point where an acquisition can't close the gap.
What's surprising to me is that they couldn't capitalize on their migration strategy for their legacy LonWorks market so far. It sounded like a strategy that could turn the company toward break-even.
The window for a turnaround is closing. Nice (meaningless) talk about potential contracts or a potential acquisition at the CC will only be appreciated if Echelon can grow non-ENEL revenues by _at least_ 10% relative to Q4/14 and total revenues beyond $10 M, That might get a pump organizer to add a few blocks, and some participating analyst clowns to issue an upgrade.
Looks like we'll see a reverse split prior to Q1/15 already ....
As regard cost-cutting, I think that's the only thing they have done ok. The company shrank from ~320 employees in 2010 to 106 employes as of Feb 28, 2015. But don't get me wrong, it's pathetic having to refer to downsizing as the only positive this management can take credit for over four years ...
2015 10-K: "... As of Feb 28, 2015 , we had 106 employees worldwide, of which 32 were in product development, 30 were in sales and marketing, 22 were in general and administrative, 18 were in operations, and 4 were in customer support and training. About 69 employees are located at our headquarters in California and 9 employees are located in other offices throughout the United States. Our remaining employees are located in eleven countries worldwide, with the largest concentrations in China, Hong Kong, the Netherlands, and the United Kingdom. ...."
Echelon is still in the Holley JV, which they intent to hive off. This may get them down to around 90 employees. But after that, it will be hard to downsize the company any further. They can hardly hive off their bread-and-butter business selling LonWorks platform products. Echelon's core business involving both hardware and software design is simply not designed for this kind of revenues.
As regards hiring an investment bank, I totally agree. Sege is (b.)(s.)'ing for seven quarters now about IIoT and the 4 billion devices out there by some day in the 2020s, but he can't form one coherent argument on how to grow their non-ENEL revenues by 50% to break even. All these "in line with expectations" results Q after Q is totally meaningless when they have no idea how to keep the boat from sinking over mid term.
If by Q1/15 there's still no break-even plan, we might even trade below book value. They are just running low of cash for any meaningful acquisition that could help them close the revenue gap.
Echelon made 33% of its 2014 revenues from non-ENEL EMEA. The EUR is down ~25%. Someone along the cash flow chain lost 25%, that's for sure --- Echelon's end customers, Echelon's OEM's, or Echelon itself. My bet is, all three will share the burden. Although Echelon carries out almost all of its business in USD, I assume they will have to give concessions to maintain whatever remained of their market share ... ENEL, I suppose, is hooked for a while so they will have to assume the ForEx burden for their ~$3 M payments to Echelon in 2014.
No mention of Oshman Turst, neither in the 2014 10-K nor in the 2013 10-K. As regards Enel, actually I would have taken it as more positive to see Enel piecing out of ELON. But nothing makes sense to me when it comes to Enel anyway. Why Silivio Gallo has held on to Enel's investment in this ex-smart meter stock is a mystery for me -- he should be the one to know the competitive situation in Europe best.
Ain't looking good here. ELON is $20 M short of revenue just to break even on cash flow, and likely $25 M to break even for shareholders. Now it's two years since Sege announced they had "fleshed out" their new strategy addressing the device legacy market. TWO YEARS and literally ZERO evidence that this can generate NEW revenues -- pathetic to the n'th degree, given there are 120 M +++ LonWorks devices out there. Now Sege is talking about a $1 M lighting RFP in which they participate. This is almost meaningless in the context of their break-even target between $55 M to $65 M. They need one of those contracts every quarter just for lighting to become a sustainable vertical business.
Worse, they are 8 cents away from non-compliance with Nasdaq. AFAIK, after 30 days of non-compliance, Nasdaq will send them a letter asking them to respond with a strategy how to get back into compliance, and my gut tells me this will include a hefty reverse split of at least 1 : 5 ... and that will soften the potential effect of a pump-n-dump.
An acquisition to the tune of $25 M can still turn the boat, but with every Q of procrastination and $2 M less in cash, they are burning out this option, too.
I guess the best we can hope for at this point is they are being acquired in the $1.25 to $1.5 a share range, or a pump-n-dump due to a $1++ M lighting contract, some meaningful partnership, and/or an acquisition on Echelon's part. That would hopefully get us into a similar PPS range.