Whys1, I'm holding the bag too. Averaged down, and down, and then down again. Could average down again.
I think the most important part of 4/17/00 will not be revenue (it's already been announced) or earnings (which will be related to earnings), but what management has to say about the lawsuit settlement and design wins.
On the lawsuit news, I suppose it could only get better, since the news release reads like POWI gave up everything and got nothing. I am hoping that the lawsuit settlement will be a commitment from Motorola to buy a certain level of supply over the next x years, and that failure to do so will bring a contract payment for cancellation. This way POWI could earn money from MOT rather than get it by damages in court. If the commitment was for a large enough sum of money, this would be good for POWI. And if cancellation carried a cost (such as the amount of the damages award that POWI abandoned), POWI would not have given up much. If POWI did get a decent settlement, price could go up 25%. OTOH, if MOT just threatened not to stop buying POWI chips, and had POWI cave in to keep MOT business, then the price could drop another 25%.
The way POWI managed this news release is poor, like a company saying "We will revise our earnings reports. We'll let you know what actual earnings were in 2 months." After an announcement like that the stock will tank and stay tanked for 2 months. But in this case, POWI could have told us everything about the settlement from the beginning. Very bad way to release news. |
