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Recon Technology, Ltd. (RCON) Message Board

hageneriksson 534 posts  |  Last Activity: 16 hours ago Member since: Oct 13, 2009
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  • Reply to

    Good chance to short the shares tomorrow

    by hageneriksson Oct 30, 2014 8:36 PM
    hageneriksson hageneriksson 16 hours ago Flag

    I will translate it for you: They might see one ore two more quarters of Datacom tailwinds and then this will be gone.

  • hageneriksson hageneriksson 16 hours ago Flag

    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.

  • hageneriksson hageneriksson 16 hours ago Flag

    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.

  • hageneriksson hageneriksson 17 hours ago Flag

    so how did they diversify ? They are still mainly exposed to the high end smartphone market which isn't exactly growing. If Apple hits a homerun Android competition takes a beating and the other way round.

  • hageneriksson hageneriksson 20 hours ago Flag

    Nobody would have assumed a 30% tax rate given the Wolfson acquisition but instead of generating healthy overseas profits these losers actually burning cash big time. And yes - the lower gross margins going forward shouldn't surprise anyone but together with the high tax rate current FY15 estimates look way too high (and analysts have already modeled a 25% drop in profits going forward but this won't be enough).

    So putting this all together FY15 eps might come in somewhere between $1.10 and $1.30 compared to the current $1.51 consensus estimate.

    You would agree that a stock with higher tax rates (these are actually CASH payments), decreasing margins and a poor performing acquisition shouldn't trade at a forward p/e of close to 20.

  • the strength seems solely due to the strong market - actually the shares should be down substantially given the dismal Audience results and guidance which give you an impression of how BAD things really are at Wolfson currently. Audience and Wolfson are direct competitors.

  • hageneriksson hageneriksson 21 hours ago Flag

    there are 62 million shares outstanding currently according to Yahoo - buying back just 10% would amount to $120 mln

  • Reply to

    Good chance to short the shares tomorrow

    by hageneriksson Oct 30, 2014 8:36 PM
    hageneriksson hageneriksson 22 hours ago Flag

    so go and read the transscript then at SA

    Unidentified Analyst

    You mentioned, you know, some good trends you are seeing from some Web 2.0 customers or clients. So I wondering what kind of visibility you have in that going forward, or I guess what kind of -- how long you kind of expect this sort of increase datacom revenue to continue.

    Joseph Liu - Chairman and CEO
    Well, there is two-fold. One is the number of Internet based company, you will have increase from, you know, historically one to not more than four. And then the second question is, are they continuous? And they are not. But I -- we can see probably into a quarter maybe two. Right now, I think the visibility, you know, into -- to calendar year 2015 is minimal.

  • hageneriksson hageneriksson 22 hours ago Flag

    It has always been and CRUS enjoyed its fair share of this phenomenon a few years ago with the shares moving above $40 on the IPhone hype. And actually there are at least three analysts out this morning with cautious GPRO commentary.

    There's just no reason to defend the shares at still elevated levels here, earnings for FY2015 will be down around 40% from current levels thanks to lower margins, a much higher tax rate and a poor performing acquisition. Look at the Audience numbers and outlook just reported and you might get an idea how poorly Wolfson might do currently.

  • Strong results and guidance due to very temporary tailwinds in the datacom business as indicated by management on the call. Will be completely gone in FY15.

  • hageneriksson hageneriksson Oct 30, 2014 3:15 PM Flag

    The "beat & raise" isn't what it seems - analysts didn't factor in the recent acquisition so the upside isn't that material here. And it is solely due to initial IPhone 6 demand which will come back to more normal levels already starting in Q2.
    But there are plenty of things that are going in the wrong direction at CRUS and that's why the shares are down. A new 30% tax rate, decreasing margins, Wolfson underperforming expectations, new net debt position are just a few key points here. FY15 eps might decline by around 40% from FY14 levels.

  • hageneriksson hageneriksson Oct 30, 2014 3:10 PM Flag

    I explained things in detail - can't you read or do you just like to refuse reality ?

  • My short term price target remains at $3 but if the company will be able to deliver an even better q4 this has ample upside.

  • hageneriksson hageneriksson Oct 30, 2014 2:10 PM Flag

    you will of course lose even more as there is not a single catalyst for educated or institutional investors to buy the shares here.

    (1)
    The huge cash position has turned into net debt due to a seemingly ill-timed and perhaps even ill-fated acquisition. No chance for dividends anytime soon.
    (2)
    Ever decreasing margins.
    (3)
    New 30% tax rate.
    (4)
    Initial IPhone 6 ramp soon history with Apple revenues falling back to a more sustainable level going forward (as always).

    So I guess peak revenues, lower margins, higher taxes, net debt levels and a major acquisition underperforming expectations by a wide margin arent't the ingredients to make the shares a strong buy.

    The shares are expensive at these levels and actually most of the smarter guys in the market are pretty much aware of this fact as evidenced by today's price action. One of the best short ideas in the market currently.

  • hageneriksson hageneriksson Oct 30, 2014 12:19 PM Flag

    I would like to add that the company won't have the current brandnew IPhone 6 tailwinds caused by initial strong demand for the devices going into 2015. While I suspect the devices to do very well through the whole FY15 the initial shipment levels won't take hold just like already seen in previous IPhone generations. And now that Apple finally gave their customers bigger displays I don't see the upcoming IPhone 7 to repeat the current success by any means.

  • The only way the company seems somewhat cheap here is using the overall FY2014 expected eps number of $1.99. But that will soon be history.

    Going forward into FY2015 margins will be much lower and tax payments will move up from basically zero to a whopping 30% rate. Current FY15 eps estimates still seem way too high here given the new information revealed on the conference call yesterday.

    To make things worse the Wolfson acquisition is a major failure at least for now as the business all of a sudden needs huge capital investments while their revenues and margins are falling off a cliff. And despite the troubles at Wolfson they did not renegotiate the purchase price.

    The ever decreasing margins with regards to the Apple business are an ongoing theme but clearly they don't help things here either.

    So looking to FY15 eps is currently projected to go down 25% to $1.51 but these estimates will soon have to come down significantly given the new margin reality, the Wolfson issues and the huge tax rate increase.

    Putting all this together an FY15 eps assumption of $1.30 still looks pretty optimistic here - the truth might come closer to $1.10 to 1.20.

    Using the current $19 share price you have a company with decreasing margins, increased tax rate, a poor looking acquisition and still severe customer concentration trading at a forward p/e of around 17.

    I don't know of any other company with these characteristics that trades at a p/e that high. I see downside for the shares to around $12 here just to kep their current p/e valuation going into FY15.

  • Reply to

    revenue guidance 99 or 105-115...

    by shuki2020 Oct 30, 2014 11:12 AM
    hageneriksson hageneriksson Oct 30, 2014 11:42 AM Flag

    I don't see how they would be able to generate cash at these revenue levels. The call was a complete disaster (once more). I wouldn't touch the shares at all.

  • Reply to

    Some Notes and Thoughts from the Call

    by gr0operator Oct 30, 2014 10:16 AM
    hageneriksson hageneriksson Oct 30, 2014 11:38 AM Flag

    and not to forget about the new 30% tax rate starting in FY15 which is only partly included in current analyst estimates. FY15 eps estimates of $1.51 look to high here. Taking the number down to $1.30 you have an P/E of above 15 for a company with decreasing margins and earnings.

  • Reply to

    Why it's gambling, not investing

    by bigbass258 Oct 30, 2014 11:19 AM
    hageneriksson hageneriksson Oct 30, 2014 11:31 AM Flag

    no - headline numbers from the past just mean nothing but V actually reported a very good quarter and outlook and didn't miss on earnings.

    PEIX is just facing margin issues as the former transportation premium is going away as ethanol from the midwest finds its way to the west coast again by rail.

  • Reply to

    Great Quarter - Takeover Target

    by focus_on_value Oct 29, 2014 9:32 AM
    hageneriksson hageneriksson Oct 30, 2014 11:23 AM Flag

    You bought the shares six years ago and didn't take profits once the shares hit $5 ??? What kind of investor are you ???

RCON
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