Hi Clam Clam
It is nice to have a reasonable discourse on fundamentals. I'm a technological idiot, so most of the technology issues go over my head, and I see no merit to TA, so my only bailiwick is financial analysis. I agree with virtually all that you have said, so consider this reply as a little "nit-picking".
It seems unlikely that PAIR would have, or even could have, pushed sales into the last month of the first quarter because 1. There was no need to do so -- they beat analysts' forecasts last quarter, and Strauch has been doing his best to talk down the estimates. Pushing sales would be foolish. 2. I doubt that PAIR has the ability to time its sales. After all, its customers are RBOC's, not middlemen and retailers. Unless I'm mistaken, there are no channels to fill.
My comment about product transition was meant to imply that if new products are in the offing two results may be expected: ramping up production and being reset to a lower point on the learning curve could hurt current production, leaving pent-up demand unsatisfied; customers may defer purchases in the current period opting to wait for the new product - again adding to demand in the upcomming quarter. I'm not suggesting that this is what's happening at PAIR -- just making a general observation.
Your comment about "intrinsic value" leaves me somewhat puzzled. The capital asset pricing model uses the discounted value of future dividends to value a company. However, in the absence of dividends, cash flow in a small company (I'm talking about net worth here) is not a reasonable surrogate for a variety of reasons. PEG and YPEG values are frequently used, though I'm not comfortable with them because their theoretical bases elude me. If you have some reasonable valuation model for small growth companies could you share it with me? I've been fiddling around with some that make the assumption that a company will grow it's eps at some arbitrary rate for a fixed number of years and then begin paying out dividends that grow at about the same rate that eps increases. Of course, this implies that growth will decrease once dividends begin to be paid.
I'll attempt to comment on some of your other points in later posts. Thanks again for your reply.
Regards,
Paul |
