Hi Aaron,
It is doubtful that this quarter resulted in anything other than what NPIX indicated on its conference call in the latter part of January, when it predicted "roughly" a breakeven quarter from operations, and ending up slightly in the black due to interest income on their cash "horde."
My guess is that the stock is suffering (and suffering is *precisely* what it's holders are doing, too!) from the same pathology as 3Com, CSCO, and FORE...which are all captive to momentum players that are bailing out. Even today, with the Dow up about a hundred points, the NASDAQ ended lower, with the COMP down nearly one percent.
Of course, I fully realize that NPIX is acting worse over the last week, but on a percentage basis, both FORE and 3Com are actually down more. What I contributed yesterday is still, for me, the bottom line. The company is now valued at approximately $ 125 million, including nearly $ 50 million in cash. The FDDI business is worth "something", probably at least one times sales, for another $ 40 - $ 45 million. So, the fast-ethernet business is worth only $ 30 million.
A few months ago (and of course, before you complain, I realize that values must have changed somewhat), Bay Networks acquired a company with no products in the market for nearly $ 100 million...Intel acquired a money losing *international* company for nearly $ 75 million, and virtually every tech merger (pre-public trading) was for 9 figures or more. Compare that to NPIX, and it is obvious that the company is trading well below "value", even if its hard to be precise about what value *is*...
Actually, it wouldn't surprise me a bit to see an unsolicited takeover offer for this company. Remember, virtually *all* business operations need to expand bandwidth, and upgrading from 10 Base T to fast ethernet is an *inexpensive* way to accomplish that, and requires no real changes in training, since the two connectors are of such similar technologies.
The margin calls out there are creating havoc, no doubt. But, with havoc, comes opportunity. Perhaps you should think about it *that* way.
Good luck with your investing. |
