Mr Price Monger - No I don't know Benhamou, except I have listened to a couple of his conference calls and I have always found him forthcoming, direct, and precise in his answers to questions. He does not hesitate and dodge answers and the level of technical and management expertise at his fingertips is phenomenal. I always learn a great deal when I listen and try to think about what he is saying.
With regard to how well he has handled the press -- I personally would rather have CEO's telling the public whatever forward information they have promptly rather than keeping it inside for Analysts and insiders to profit. It seems to be that this approach is consistent with protecting ALL shareholders rights not just some who have access to the information. While it is hard to imagine how the stock could have gone down more, just imagine if he hadn't released any information about sales and or margins until earnings. The stock plunge could have been worse and the loss of management credibility for management would have kept a cloud over the stock for a much longer period of time.
It is also clear that the merger has a lot to do with upcoming joint products and integration of technologies that have not been announced yet but an interested person studying the industry can assume these products have to do with ADSL modems and ADSL cards and possibly other forms of LAN/WAN integration. And in fact, Benhamou previously acknowledged that it was precisely the attempt to investigate joint opportunities with USRX that lead the two parties to merge. I would expect there would be increased R&D expenditures associated with these projects. That is my hypothesis to explain your R&D blip.
I don't think gross margins were maintained during the quarter so I can't follow your complaint that Benhamou didn't "mention the fact that gross margins were maintained during the 3rd quarter". My understanding of the stylized facts are that gross margins were down in stackable hubs and switches due to competition from Bay. Down in NICS due to price cuts from Intel. (Though as you point out the damage wasn't as bad since the transition to higher margin 10/100 cards was further along than expected.) And up in ATM high end products. In addition, in the conference call he said March was better than February which was better than January. When was he supposed to have announced the story about the margins? In which products? Should he have just said that they were up in ATM? That doesn't build credibility come earnings time.
Fair enough, I guess you are saying he could have explained more. But by the standards of most CEO's he was absolutely gabby. Was there a pattern of only giving bad news? I don't know - he often insisted that the industry growth rate was intact at 30-50%. He could have explained more about the evolution to 10/100 base T and this might have cushioned the fall. But if it would have, why hasn't the stock price gone back up at all post confernce call? I suppose there are many answers to this -- some having to do with the downdraft in high tech in general which is also associated with the competition in networking.
At any rate, I should have said that you put forth an interesting conjecture, I didn't believe it but wanted to know if you knew more. If I am investing in a company with a misleading CEO I do want to know. I have been burned by another company where the CEO sold 200,000 shares one month before releasing terrible earnings with no warning whatsoever. The stock slid down all month before the earnings report. After the fact, you could tell that those in the know were getting out. I guess that is why I prefer Benhamou's style of at least telling everyone.
Price - I will look into finding out if one can know the timing of options awards for companies. I agree that some managers do this kind of thing - I just don't think Benhamou did - but you do have an argument based on too much negative news released and not enough positive news released.
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