Mark,
Thanks for messaging me that NTRO recently raised
$350M in a secondary offering. I didn't realize
that they have so much cash on hand. It would
be interesting to know how much is left. When
did they do their secondary offering?
Still, even if they have a few dollars/share in cash,
their forward P/E (and P/E/G) ratios are extremely high.
For example, if they have $4/sh in cash, we can subtract
that from the $54 share price to get $50/sh... with the
Dec'01 FY EPS predicted to be $0.24, this still gives
them a forward P/E which is over 200 and a P/E/G of 7.0
(based on a 30% annual growth rate).
Source: biz.yahoo.com
I see that NTRO is going to be in the Russell 3000,
and that they've made a bunch of OEM agreements
lately. But I simply can't translate these things
into such a high share price. Also, they haven't
proven that they can manufacture their products in
high volume, while delivering high quality, in a
cost efficient manner. The cash they have offers
them a cushion against operational problems (and
possible market downturns, as we saw in the Asian
financial crisis a couple years ago) but in the
long run they'll need both technically superior
products and cost-efficient high-quality manufacturing
operations to survive in this competitive market.
I'm afraid that any technical advantages they may currently
enjoy may be short-lived and, if they run into any
operational problems, this may distract them so much that
their products may fall far behind.
The current share price not only seems to assume absolutely
perfect operations... not even the hint of a stumble... but
it also seems to assume that they'll somehow capture the
lion's share of the Broadband Fixed Wireless Access market.
Those seem like highly dubious assumptions to me.
Finally, as I originally asked, I'd like to know exactly what
the technical characteristics of their products are... and
what exactly are the technical advantages of these products
compared to those currently offered (or soon to be offered)
by their competitors.
Rob |
