Jas,
IMHO, the two reasons that prompted you to invest in ADTN are good ones. They alone, however, may not be sufficient to keep its stock from falling or help to lift the stock price. Don't get me wrong, I'm very interested in buying a few ADTN shares, but what I have seen lately caused some concerns.
(1) Price cuts in HDSL products. ADTN initiated the price cuts, as much as 35%. Adtran's contention is lower prices will result in higher volume. But Pairgain seems to think the RBOC's will pocket the savings. The end effect is earnings will be hurt. The jury is still out on this one. But I question the motive behind such a large price cut this year. Last year and the year before, the cuts were 14%, and 24% (?), respectively.
(2). A meeting between investors and company executives last week. After the meeting, some investors sold their shares. One analyst lowered its earnings projection. I don't know what happened behind closed doors, but if the big investors decided to sell, you can bet that things are not going as well as expected.
I'll wait till the Q2 earnings are out before buying in. I think the chance is good that one can buy at lower prices.
I hope to hear other opinions.
Regards,
Tom |
