ISPD longs (if there are any besides me and a couple of others),
Lets beat this one up a bit. I am not too proud to admit that I make mistakes (actually a lot of them).
This company's stock appears to be stuck and it is flirting with support. This concerns me as we are nearing earnings and it also appears that Brooktrout is still calling a lot of the shots.
I am in this one for a few reasons.
First, DSL has the potential to be a hot sector and get some of that magic sector rotation action we all love.
Second, everyone seems to think that they have a superior product that offers ease of use and a reasonable cost for the scale of small to mid-sized markets.
Third, a couple of analysts are bullish on them meeting their numbers, not just for this coming quarter, but maybe even the next.
Fourth, they have an agreement for unit sales to a European ISP or ?, as we don't really know the customer. This is rumored to be the big deal that gets them rolling and makes up for the Simon deal and a few others that they lost.
Fifth, a lot of industry analysts are saying that DSL deployment is going to skyrocket in the next few years, and may in fact surpass cable.
Sixth, recent movements in the industry lead me to believe that CS will be buying more product from ISPD in the future.
Seventh, buying activity by certain MM is unusual.
Now for the bad, and it appears that there may be some.
First, this company has been very vague about details regarding their sales. Customer names are not provided under the guise that it allows some of their chief competitors a chance to tamper with the deal. This is a very weak excuse to me, as it indicates the that the superior advantages that ISPD offers must not be strong enough to counter this type of attack.
Second, PR from ISPD has been minimal for the past 6-7 weeks. No additional details regarding either sales or progress have been released.
Third, the CEO of the company appears to have been sick and just now may be returning to work.
Fourth, the CEO of the company likes to send emails with positive statements regarding the future of the company. This is always a bad sign to me as if good news is available is should be distributed to all shareholders equally. I also find that a CEO that has time to respond to a lot of emails has too much time on his hands. Maybe the IR department is doing this with his blessing, but then they should not have his name on them as the author.
Fifth, the company is releasing earnings with Brooktrout who is also doing a little PR hype effort of their own. This concerns me as ISPD is a separate company now and should have established their own timeline for reporting and events. BRKT is the majority shareholder and is still providing some SG&A support and possibly other support we are not aware of.
Sixth, BRKT being a majority shareholder makes a buy-out more difficult for ISPD. They must approve the terms and may not be inclined to sell for reasons we may not be aware of.
Seventh, the decision to IPO and then miss numbers last quarter has raised serious concern with the funds and private investors regarding the integrity of ISPD's management.
Eighth, it is possible that BRKT just wanted to get dead wood out of their biz plan and is willing to accept sustained losses from ISPD.
I would like to hear from other longs and shorts that follow ISPD.
Good Luck
Thurston |
