OFF THE TABLE
CUX / COM
I sold my small position of CUX yesterday and took some profit of COM. I planned to sell CUX here in order to raise some fund.
SMTS announced yesterday morning. While Q4/05 was alright (which was expected), the 06 guidance is weak. Moreover, it announced that it will offer approximately 2.45 million shares. The combination of weak guidance and more shares spook the market and it went down by more than 15% in two days. This is the problem of purchasing high multiple stocks. Earnings and forward guidance have to be perfect, or else. I thought the guidance is conservative and the management did a poor job to elaborate the use of the fund, and the adjusted EPS for 06 so that an apple-to-apple comparison can be made. If this is a case of under-promise / over-deliver, the management better deliver, because at the current guidance, its valuation is rather expensive.
I decide to keep it for now and wait for Q1/06 results. I continue to like it because of (1) monopoly; (2) pricing power; (3) relatively lower penetration ratio; (4) subscriber type of revenue stream; (5) clean balance sheet; (6) international opportunities; (7) potential take-over target. But this one could cause me some sleep in the next few months.
I sold my small position of CUX yesterday and took some profit of COM. I planned to sell CUX here in order to raise some fund.
SMTS announced yesterday morning. While Q4/05 was alright (which was expected), the 06 guidance is weak. Moreover, it announced that it will offer approximately 2.45 million shares. The combination of weak guidance and more shares spook the market and it went down by more than 15% in two days. This is the problem of purchasing high multiple stocks. Earnings and forward guidance have to be perfect, or else. I thought the guidance is conservative and the management did a poor job to elaborate the use of the fund, and the adjusted EPS for 06 so that an apple-to-apple comparison can be made. If this is a case of under-promise / over-deliver, the management better deliver, because at the current guidance, its valuation is rather expensive.
I decide to keep it for now and wait for Q1/06 results. I continue to like it because of (1) monopoly; (2) pricing power; (3) relatively lower penetration ratio; (4) subscriber type of revenue stream; (5) clean balance sheet; (6) international opportunities; (7) potential take-over target. But this one could cause me some sleep in the next few months.
posted by ZIGZAG at 2/01/2006 10:29:00 PM
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