Mani,
Let 'em learn the hard way.
Many people think just because a stock has been beaten down and they currently have a good balance sheet that it must be a good investment. IMO, this simple approach is no substitute for DD or multiple years of experience following the company and its management. I agree with everything you have said. Management was blatantly dishonest in regards to winning back market share and especially regarding the DVD opportunity. Just three months ago they were saying that revenue from DVD design wins would be seen this summer. Ninety days later, they are canceling the entire DVD project. What makes anyone think the same thing won't happen with the digital photo initiative which was suppose to be even more speculative than DVD?? I say DP has at least a 50% chance of ending up like DVD.
Management now has pretty much admitted that they are back to square one. No hot products. All of the gambles they took to capitalize on the one early success they had have failed. Now that the oem's have finally seen the new 3D solution, none of them want it. The intention to leverage their embedded DRAM technology was noble but has not scaled up worth a hoot and is not cost effective.
Basically, investors can look forward to multiple quarters of future losses, cash being completely depleted, book value shrinking, and more than likely taking on debt. Hmmm... not exactly my idea of a great investment. But hey....it's only 5 dollars <gg>. Maybe they should do a 5 for 1 split then it will even be a better bargain <gg>.
Seriously, who knows...they may one day turn things around...it may take years...but they may do it....then again they may not. A key here, regardless of business prospects, is that management has lost all credibility. This is very much like the OAKT debacle of a few years back. OAKT did finally turn things around and recover, but it took years.
Personally, I see many better value plays. NMGC is no where near to turning their business around. In fact, their business prospects have yet to reach bottom.
Good luck to all,
FF |
