as you might imagine the thing is:
The more the Apple business outperforms the more the Wolfson business takes a beating as a potential high end smartphone buyer actually has to decide between Android or Apple - currently clearly Apple has the brandnew device and finally with the right display size so they win lots of new customers currently. But the high-end market shows the slowest growth compared to low-end or mid-tier devices. As the Apple business is much bigger than Wolfson they might be able to compensate one or two more bad quarters from the acquisition but after that the IPhone numbers will come down as always in the product life cycle. And given the new margin and tax rate reality coupled with huge losses and even higher investment needs at Wolfson they need an awful amount of outperformance on the Apple side to even come close to current analyst estimates. The stock is an easy short going forward.
Shares are finally dipping into the red here as expected - covered 50%, leaving the rest for more downside, On a weak day for the market the shares might have crashed another 10% given the Audience debacle.
I will translate it for you: They might see one ore two more quarters of Datacom tailwinds and then this will be gone.
Very little surprise with regards to the reported numbers as the good cash flow was already reported in a recent SEC filing.
new contract awardments reported in Q2 release: $54.6 mln
new contract awardments reported in Q3 release: $57.0 mln
They will have to win more business at an accelerated pace to even come close to next year's analyst consensus estimates.
current consensus is for $44 mln in revenues in 2015 - if Q4 will show equally anemic contract growth the company will miss analyst projections by a mile.
Actually I would have to file for bankruptcy if I would have shorted the stock for all the time I have been negative on the company as the price has easily tripled from last year's capital raise at $4.
Actually future earnings depend on the company's ability to win new contracts at a higher and more regular pace than reported in Q3. Quarterly revenues might surprise to the up- or downside dependent on the implementation pace of already announced contracts. But to live up to future revenue expectations the company needs to get new and outsized contracts pretty regular. Another quarter with virtually no new contract wins won't bode well for the share price regardless of any upside reported to analyst expectations.
nice gain - I bought the capital raise dip that time but I had and have no trust in the company and management so I sold out for a measly 20% gain that time.
as management usually touts the great prospects and pipeline
stock falling back after conference call - putting a short position to work here - will cover by day end as pretty sure all of the bullish seeking alpha writers will continue to write their enconiums tonight.
Actually the weak order intake shows that the business is indeed lumpy and new order awards remain unpredictable (which was the core argument of the SA article). And of course the stock is up 300% with the last 12 months, so the easy money has clearly been made here.
Q4 order intake will be a crucial point next quarter as another three months without meaningful new business awards would put current FY15 estimates in complete jeopardy. They need at least $15-20 million of new business awards for the stock to move higher from here.
Otherwise cash looks much better and margins look good, too so I would attribute some of the decline to profit taking indeed and the rest to the poor new business awards number.
I still think they are a fraud. They bought the heavily loss making business unit for close to nothin and all of a sudden the unit delivers stellar results (and despite this don't have to pay any earn-outs to OTI).
The shares will be dead money for some time going forward and should be avoided - company still has a good balance sheet thanks to the recent IPO but that's not enough to make the shares a buy here. Covered the $8.50 after hours short here but I suspect the shares to test the $7 level later today.
I am taking profits on 50% of the position and let the rest work its way.
I would suspect the share price to be even lower at that time (it is already down 6% from your entry at the time of this post) as the company already indicated that FY15 will unfold far below current expectations. Withe continuing forex headwinds the stock should be avoided until results show sustainable improvements. At the reduced revenue levels the company will also start to consume significant amounts of cash going forward so this looks like one of the worst long ideas in today's market. Put your money elsewhere and look for company's that are currently turning around after a string of disappointments. For example BLOX, GIMO or MRGE
record backlog but "it's up from last year's levels" - given the poor revenue performance it should indeed be up by a huge amount but I suspect it is not
they will be slightly profitable and cash flow positive in Q4 - actually the market is already expecting them to be SOLIDLY profitable and cash flow positive
margins will be up strongly yoy but this is mainly due to some software sales which do not necessarily repeat by the same amount each quarter
don't get fooled here - the outlook is poor and the company faces huge challenges
clearly they are not expecting revenue growth going forward - FY15 estimates are toast as expected
actually it is a great chance to short the shares as FY15 guidance will come in FAR lower than current estimates. Earnings outperformance was solely due to layoffs and lower marketing spend.
I am pretty comfortable here shorting the shares at these elevated levels. Management already guided for lower revenues going forward on the call. There's still no viable business here and no catalyst.