Dave, I accounted for the writeoffs, but not for the settlement with the R&D partnership. Seems like they got a fair deal on that settlement, and it is out of the way now. Litigating would have been a waste of scarce valuable resources. Anyway, back to the financials.
If you compute the $2.974m writeoff for In-process technolgy related to the settlement divided by the shares outstanding of 14,426 you get a little over $.20, making the loss $.55, slightly better than my forecast of $.56. So I'd have to say that the number is right on expectations.
So what about the specific numbers? First, I am concerned about the SGA number. It rose from $7mm in the first quarter to $8.3mm in the latest quarter. Perhaps this was due to expenses related to the financing that they made, and also due to legal expenses in relation to the settlement. Let's hope so. Perhaps the conference call will clear that up, if it is being recorded for later listening. I noticed that they slashed R&D significantly, which I assumed that they would need to do.
Next, I note that AR is still significantly greater than sales, which is still a bad sign. On a brighter note, inventory is falling, though it is still huge, at twice sales.
After reviewing my model, I now compute losses for Q3 at $.23 up from my prior figure of $.26, primarily due to there being more shares outstanding. For Q4 I have a loss of $.08.
Now we will have to see what the street thinks tomorrow. I personally don't see much impact as the results were pretty much what should have been expected.
Good luck,
Carl |
