They were spot on GOMO and they put out a pretty detailed report on VNET which has months of field work in it so they clearly have some valid points here.
In fact many more tough questions than on the infamous NQ call some months ago - would expect investors to abandon the shares as there are just too many questions raised by this very detailed report.
Managment's presentation was ok but analysts clearly have become highly skeptical of the company as evidenced by plenty of tough questions mainly centered around accounts receivables, former and recent acquisitions, cash burn and many more topics. Stock started to slip during Q&A as management started to stumble finding satisfying answers to many questions.
the company already recorded revenues of more than $12 mln during the first 9 months of the fiscal year so the guidance for FY14 revenues to exceed $15 mln would mean no sequential revenue growth despite Q3 having been an off-season quarter. At the nine month level the company was already solidly profitable so I don't think the press release offers any reason to celebrate for investors.
Last quarter they comfortably beat revenue and eps estimates and raised both eps and revenue guidance going forward. This time they badly missed on revenues and had to lower revenue guidance accordingly. Margins continue to outperform but this might be mostly due to lower expenses than due to higher asp
while they raised eps guidance very slightly they actually lowered full year revenue guidance due to the missteps experienced during the 4th of July promotion.
while I don't think the company will go bust the shares might be worth just a fraction of their current price. Compared to NQ this VNET still looks like a pretty honest company.
Nobody should make decisions based on Yahoo Message Board postings - but the writing is all over the wall and I have explained the short case several times.
The company's weak market position makes it virtually impossible for them to benefit from the volatilty of coffee prices. Once coffee prices are rising their customers simply reduce their purchases or demand deep discounts to market prices (which JVA has to agree to as they wouldn't sell anything otherwise). When coffee prices are falling margins got squeezed anyway. So JVA has no chance either way. The company is mostly an ATM for management which sells millions of overpriced insider shares to dumb investors every year without delivering any type of acceptable results.
Given these issues the shares should trade at a 50% dissoultion discount to book value at the very best (given ownership and management structure there's no way the company can be sold) leaving us with a price target around $1.50
that's all you have to say about the numbers ? What about the 400 basis point decrease in gross margins ? What about the company having to dip deeply into its credit line ? What about the $6 mln cash burn during just one quarter ?
actually the results are a shame especially given management's comments last quarter - gross margins came down 400 basis points despite slightly higher revenues qoq - the company burned six million dollars in cash and needed to dip deeply into its credit line ($3.5 mln). Actually the results are even worse than I thought. Adding to short here as the shares should trade at around $2
the product backlog is actually down 7% quarter over quarter as the company again failed to secure any meaningful order volumes
product backlog was $146.6 mln last quarter, now it is down to $137.3 - the math looks pretty simple to me
actually product backlog is DOWN qoq as the company pretty obviously didn't took in a single major product order during the quarter
Actually this should drop like a rock during the call once it becomes clear that 2014 results will come in nowhere near the previously communicated targets. Management will face some tough questions from analysts tomorrow.
they guided for $50-60 mln in revenues just 3 months ago - and they did not reaffirm ANY of their previously communicated full year targets.