Kevin & Andrew - Qwest today (2 Nov) ". . . told contractors and vendors working on the company's worldwide network to stop work immediately to cut costs.
"Chris Hardman, a Qwest spokesman, confirmed the order but wouldn't disclose how many contractors or how much work is affected. He said the directive is part of an effort by the Denver-based telecommunications company to cut costs, including capital expenditures.
"The directive "was sent to contractors giving notice to suspend certain operations until an analysis is complete," Hardman said. In the meantime, he said, "we are fixing service issues and doing everything we need to move forward."
[snip a bit more.]
Obviously prior to this news, on 26 Oct UBS/PW maintained its BUY on TELM but lowered its 12-month target from $17.50 to $12. UBS/PW says TELM recognized revenue from only two companies - Dynegy (80%) and Qwest (10-20%). Cable & Wireless revenues have been pushed to start in 2002 and run through 2005, and C&W confirmed for UBS/PW that it is still committed to deploy TELM products then. Notwithstanding news through 26 Oct, TELM maintained its full year guidance for 2001 and 2002.
Inventory turns for the 3rd quarter were 1.6, up from 1.2 sequentially (er, is that from last qtr or from last year's 3rd qtr - I fergit what "sequentially" means). DSOs are 1 which means TELM doesn't recognize revenue until it gets cash in hand. (How quaint that is 8-).) Oh, yeah, TELM used about $4.3 million of its cash in the 3rd quarter, leaving it with about $225 million on its balance sheet.
What do I think of all this?
UBS noted that 77 million shares are freed from lock-up on 13 November. This may be why the current float of about 32 million has traded at an apparently (to me, anyway) low share price given its product, cash, conservative estimates in the past, etc. I suppose the $1.00 drop today is a reflection of the Qwest news which, I note, may be a temporary standstill for at least some vendors. Any chance the price is so low the locked-up holders won't unload in bunches?
Regards,
Harry J.
PS - I made long money on Q last year and a portion of this year but am no longer in it and am short-term (and under water, obviously) on TELM. |
