I understand 3Com wanted world-wide suppliers.
3Com looked at their supplier situation, and decided to trim down to two suppliers; they selected Solectron and Jabil. ACTM lost out because they were basically a one location (Massachusetts) manufacturer. ACT responded by expanding the Ireland plant, and purchasing a small ECM company in Georgia.
Unfortunately 3Com was one of ACTM's largest customers (my guess was about 20% of sales), and given their loss, ACTM will need to bring in new customers. I think ACTM is well on the way toward doing that, and the last quarter was simply a "blip" as they transition to new customers. For all we know, that might even account with the delay in the $9M in production that didn't make it out the door in time to be counted in SepQ revenues.
I really think we will see revenues rebound this quarter to the $70M range. And next year as they ramp capacity in Georgia, Ireland, and Massachusetts, I think we could see some reasonable growth. I'm not sure I'd expect the 30% management predicts, but I'll be happy with 20-25%. The PE of this stock is probably about 10-12 times next year's earnings.
Bay Networks is their largest customer, and is expanding fast, and sending more business ACTM's way (taking up some of the 3Com slack?). Bay is growing really fast, and if their stock price is any indicator, will be growing pretty fast in the future. A good customer to have.
Good luck, Paul |
