Dear bivalve (love your moniker! <G>) you've raised several issues, so let me take them one at a time.
1. You've raised the spectre of a decrease in revenue. If true, that would indeed be bad news for the stock's performance short-term. The most important issue to me, however, is the long term performance of the company. If the forecasted drop in revenue results from product transitions or seasonal ordering patterns from RBOC's this will be a transitory event of little meaning a couple of quarters from now. On the other hand, if it is the result of a shrinking or maturing market, this could be a serious problem.
2. You've alluded to a problem with receivables. Here, I must dispute that. A receivables period of 45 days is less than the industry average. I've seen no hint of financial problems with Pair's customers, so I must conclude that the increase was probably due to a disproportionate number of sales in March compared to February.
3. I disagree with your statement that sequential quarterly comparisons are the best way to judge what's going on with a business. I believe that the best way is to look at the longer term and assess the estimated future demand of product over a multi-year time horizon. Sequential comparisons can easily be distorted by issues such as product transitions and delays in orders from customers which in no way impact the overall growth prospects for the company.
Nevertheless, the stock market seems to value high-tech growth companies based largely on the upcoming quarter's results, so while I may disagree with your valuation (I am a long-term investor), it is entirely possible that it is in line with the market's valuation (which appears to me to be based on very short-term expectations).
BTW, I'd love to know the meaning of "clam clam". Is your spouse an oysterette <G>?
Regards,
Paul |
