Well, Dennis, you were right in thinking you could come back later when things are moving. They have moved far south of where you sold. Of course the stock is still rated 1, a strong buy, by all the analysts. It's oversold and still under-priced, so it's a bargain. When the stock moved up past break even last Fall it hit 11, when it moves down to break even this Summer it hits 5. For a thinly traded stock like CRNR, one big downside surprise does alot more damage than several upside surprises do good. (A variation of Shakespeare's line from Julius Caesar--"the evil that men do lives long after them, the good is oft interred with their bones."
From where I sit, the market (or I should say the small segment of the market that has any awareness of CRNR at all) just doesn't have a handle on where this company is going. Sure, the balance sheet looks great, P/E and PEG ratios look great, but what is CRNR going to be? A hardware company in a segment, high-end monitors, that has become intensely competitive, reducing margins, a startup software company for a product whose demand and profitablity is somewhat speculative, despite a very impressive revenue growth rate? Right now, the market doesn't know whether this downside surprise is a onetime blip (or perhaps, a once a year blip), or a harbinger of a fundamental and irreversible decline in demand for CRNR's monitors.
Nevertheless, I think this week's sellers have overreacted. It's absurd for a company like CRNR to be trading at book value. (Retained earnings as of 3/31/97 were $39,330,000/7.48 million shares = $5.26/share.)
It's hard to guage a turnaround time. In 1996, the 3-Q return to profitability, .06/share, after a 2-Q loss of -.05, moved CRNR up to 11. My guess is we will see 7's this quarter and 9's 4-Q. |
