I am asking myself if I should really be invested in a company where the management itself is continually surprised by the earnings numbers (whether above or below expectation) and a company seemingly constantly beset by timing differences and no apparent ability to control them. I fear there will never be a consistency to the earnings stream.These guys have a surprise disappointing quarter almost every year. No wonder they get a low P/E multiple.
the toughest part is just getting the wind knocked out of you w/a $3 per share hit. you typically just don't recover from that right away. In fact it is often a precursor to another leg down reflecting desperation selling so as not to surrender all of one's gains. That $8 gap that has been mentioned may get tested but I do not think the stock does a complete round trip back to $5. The fundamentals are still intact, otherwise I would worry about a complete round trip. Credibility has been hurt badly though. Management should have warned about this as soon as they knew. Retirements, stock selling lots of stuff swirling around this event and probably just coincidentally so, but the optics and timing are not good. Institutions being risk managers first will assume the worst, but luckily a management changeout is on the way so new players will be at the helm. the new guys need to overcome this earnings variability B.S.
No mention other than Q1 would be soft, and normally softest of the year as I recall. If they knew potential outside contractor costs as yet unbilled might hit in Q1, they had a fiduciary or at least ethical responsibility to disclose it IMO, but you will never be able to prove they knew it was a likely possibility. Just blame it all on the variability and lumpiness of the business, or hide behind the idea they could not put any numbers on it so they couldn't disclose it. We and the institutions I think know something smells a little funny but it may well fall under the rubric of things you don't have to disclose if there is an element of uncertainty surrounding them. All you can hope is that as part owner of a company (i.e.,a shareholder) is that you get treated fairly and they didn't sell stock off knowledge they suspected would come to bear on Q1 results. Like you say w/a history of consistent selling you will never know. I believe in Karma, so……..
creed, do you think shareholders have an actionable position against the company for artificially inflated fourth quarter numbers (even if it followed GAAP accounting). Those costs that got pushed forward or were only found out about after there 4th quarter closed, related to outside contractors billings, should really be allocated to the fourth quarter not the first quarter of the following year. The executives sold stock right after the fourth quarter closed and I bet bonuses reflected fourth quarter performance as well. Then low and behold the big surprise comes yesterday,out of the blue, that they forgot to allocate some costs to the quarter and have to incur them in this quarter. Timing differences indeed w/very positive unintended consequences accruing to management that should be reversed IMO. Shortly thereafter all the relevant parties retire comfortably. Doesn't feel right to me.
if they were based on artificially high fiscal 4th quarter numbers in June that allowed revenues to be booked and the associated costs pushed forward. Man that's slimy, even if it did follow GAAP principles and was unavoidable . Do the right thing management and Compensation Committee and don't rip off the shareholders.
don't see it, too much institutional anger here. this company has not been faithful, reconciliation is going to take some time. the company repeatedly misses numbers after good quarters and breaks investors' hearts.
I have no doubt margin calls will be going out. The only question is whether someone will step into the void and pick up the stock. There is tremendous downside pressure that cannot exit the stock except in lots of thousands of shares at a time. It's not like you can throw an order in to sell 50,000 or 100,000 shares at market. I think there could be another million shares to go at a minimum. There won't be any news for probably another 90 days (the next EPS report which will likely be lackluster as well since the two big foreign orders won't hit until the second fiscal half of the year). So really you are going to have to wait at least six months for any good news out of the company around mid-2014. Traders should sell. Investors should resign themselves to a long wait. It will likely work lower near term and I would expect heavy institutional selling again tomorrow so close to year end. This is the very definition of a falling knife at this point. That's just a near term outlook, but a painful near term outlook.
worked out ok for mgmt that all those costs that were supposed to be allocated to last year's fiscal fourth quarter got pushed into this year's first quarter. Not only did it probably boost their fiscal 2103 bonuses, it let them sell stock in the window allowed from their personal holdings right after the quarter ended at a nice price. Plus the new CEO is going to get options on 100,000 shares here shortly set at a real attractive market price, following this collapse. Probably all just a fortuitous coincidence.
point taken jeffrey, could be nothing more than someone wanting to be "flat" ahead of the earnings report, especially given the most recent reports. Still the fact that it is one day before the deadline, and also no CC has been scheduled has me on pins and needles.
Taking a longer term view, if you thought the stock could get back to $15 in the next 3 years, not the next day, that is still an annual rate of return approaching 13% from its current level. That is not a bad risk-adjusted rate of return. I realize only Warren Buffett might look at it that way. But then, that is why he has all that money. Doing that over and over and over w/a long term time horizon.
You have gone from a company that could do no wrong and was a high flyer, to one where now every single piece of minutiae will be torn apart six ways from Sunday to find a possible blemish. That's not necessarily a bad thing.
most of them, almost all, probably have an unrealized gain of decent size in this. you book that gain and start the upcoming new year fresh w/something that isn't going to bite you in the behind again. at least that is what I would do. The calendar timing for all this was just unfortunate.
remember you are right in the crux of bonus decision time for these guys, I mean right in the very middle. they gotta be ticked off big time. I'm not in that business, but I'd sure want it off my books.