Howard:
I understand your comment as I stated that I am aware that the two cable equipment manufacturers have had a correlation of trading patterns in their past . . . However, my point was that this fact is independent of the comment you made that that bad news for TERN will weigh heavily on CMTO.
I thought I explained this to you by distinguishing systematic v. non-systematic risks associated with individual stocks. I guess I was unsuccessful.
Believe what you wish. I'm not here to persuade you otherwise. Price performance over the longer term will determine which hypothesis is correct. The risk, however, in this comparison, is that TERN is broadening its portfolio of broadband products beyond cable modems, and if it is successful, will mask the problems it faces in its modem business with respect to its markets where DOCSIS certification is important.
But more important to the bottom line, IMHO, is the past & current conduct of management to obfuscate not only the merits of its technology, but also its status on the DOCSIS front. A question I would want to ask as an investor, notwithstanding the company's proven record of rapid growth, is whether I can trust management to disclose the truth going forward -- in press releases, in SEC filings, on conference calls, etc. In my assessment the record is persuasive that I cannot, which is not to say the stock will not perform, but rather to conclude that where there is smoke today, there is likely to be smoke tomorrow. And where the company may be able to diversify away its risk of not achieving DOCSIS certification of its modems today, such an "escape" may not be available in the future.
As I think I've stated here previously, when it comes to investing in TERN today, there is no better reminder than the words "caveat emptor." |
