Paul,
AVCI is definitely interesting. One value manager (and I forget who it was) said that they like to buy baskets of stocks, especially technology stocks, having an EV/Revenue of less than .5. Furthermore, they make sure each has little to no debt on their balance sheet and plenty of cash.
Trailing revenues are approximately 26.6mm. With $55.5 mm in cash and another 13.5 mm in LT investments (which is bonds and commercial paper), AVCI has cash & equivalents of nearly 69.0 mm. With 12.8 m shares outstanding and, probably, another 3m options, AVCI has a diluted market cap of 87.1m. Excluding cash and adding back their operating leases and other commitments totaling about $5m, one finds out that their Enterprise Value is about $36.6m. EV/Revenue is about 1.38.
The key cause, most likely, to AVCI's recent decline is SBC's pending acquisition of AT&T which I bet you know that AT&T is AVCI's largest customer. Of course, AVCI also has sales partnerships with Huawei and Nortel.
The core router market is dominated by the likes of Cisco and Juniper. The real question is: will potential customers use AVCI to ensure there will not be a duopoly in this specific market segment.
The acquisition of AT&T creates uncertainty as to the future viability of AVCI. And, of course, uncertainty, at times, creates opportunity.
Dave |
