very good post from Andre at the Yahoo site.
Brings up what only few seem to talk about (i.e. lack of GROWTH...which we have been saying all along). I also agree with buying and selling at those prices as I did Thu-Fri (bought at 1.81 sold at 1.95). I hope the next new months will bring something that will get our price going again but for now I going to play the market game.
A couple of beefs that stand out:
"The bottom line. We view Covad as a very different story today
than it was just six months ago. Results from 1Q06 provided evidence
in support of our transition thesis and as cost-saving initiatives are
complemented by anticipated top-line growth, we believe that investor
interest in this name should continue to grow."
How is the story that different from 6 months ago? Other than
retiring the T commitment and replacing it with a more standard loan,
what is really new? We have a more solid ELNK commitment to LPV and
closer ties with ELNK, but is the business fundamentally different
now, or than it would be?
"The issue for Covad has not been about growth opportunity, it has
been about executing against its opportunities. We see evidence that
it is doing just that with the recent LPV agreement with Earthlink,
the acceleration in the VoIP business and the stability of broadband
subscription billings despite continued line losses among others."
I agree entirely with the first part, but I don't know what
acceleration in VoiP they're talking about. They must be looking at
some other company's published numbers.
Voip sub counts last three quarters have been 1,035 1,146 1,328 and
Stations have been 36,100 40,600 42,800
Not only is this NOT growth acceleration, the absolute number of
station adds (2,200 vs. 4,500 previous quarter) was much smaller,
while the number of net customer adds did grow a little more (182 vs.
111), which means we're adding more but MUCH smaller customers on
average; absolute station net additions are slowing, not accelerating.
I still think this company is in its best shape ever, much better
diversified and with substantial opportunity in LPV if ELNK really
gets behind it. I think they can drive real value focusing on small
biz sales as they have done so far. However, they have never really
shown the explosive growth that many here seem to be expecting and I
have little doubt that there will be slow plodding ahead, a very
volatile share price, and I also see no reason why the stock should go
up instead of down, unless ELNK takes the unexpected step of picking
us up, which I doubt they will anytime soon.
Having said that, I added a bit more $1.80-$1.82. That portion I
don't plan to hang on indefinitely, as I think $1.50 is just as likely
as $2.50 in the near term. IMO It's worth throwing a little extra
into the pot at that level, because I think the company's worth more
than that.
Andre |
