From Yahoo message board
We are just a few weeks from the 3/31 10K earnings report (maybe up to 6 if they go all the way to the June 30th filing deadline); then the 6/30 10Q earnings report must be out by Aug 15th. So we will get two reports quite close together. If the news is good and the market learns that CNWT has no cash crunch as is starting to ramp revenues into the $2-4 million per quarter range the of course the stock will take off. It might even double (at least from the current level of 70 cents).
No one knows if this type of good revenue news is on the horizon, but there sure seems to be a lot of optimism swirling around the company:
- They have moved to a larger facility to accommodate growth
- They have hired a new cfo and marketing people
- They are training more outside engineers than ever to learn how to install their product.
- Cisco is highlighting Cistera as a major success story in their new Solutions Incentive Program (SIP) which has just undergone a major relaunch as Cisco believes the market is primed for substantial growth starting now and really hitting in 2009. The highlighting of Cistera by Cisco greatly enhances Cistera's reputation. Of course it is still up to the company to execute and maintain their reputation.
- The company has released information indicating that the pipeline of applications by partners for the approval to sell Cistera installations is growing rapidly, hitting over $3 million in the current quarter (partners must apply to and be approved by Cisco to be eligible for the SIP program, this guarantess all customers that they are dealing with only the most secure and reputible sellers)
- Hosted revenues through Sylantro have not yet begun to roll in (or are just starting now, but not reflected in any of the earnings reports filed to date). Cistera believes that Sylantro revenues could dwarf the Cisco revenues.
To me all of this optimism is not pie in the sky, but very achievable. Of course the company must execute and not over-promise, but the road map to get them there is clear. If we see revenues of close to $2 million in the June quarter (to be reported in August), then of course the stock will soar. In other words, the near term upside is massive. With the stock price down to 70 cents a share (and the bid down to 69 cents), the risk reward ratio here looks more attractive than ever.
Something has to give, and I wonder if we are bottoming. I have added a bit to my substantial position, and am ready to take whatever ride follows. I believe that eventually the optimism outlined above will seep in to the marketplace and move the stock substantially higher.
For now, though, the market is skeptical. That sort of negative sentiment, however, can change rapidly, and on no news.
I would love to hear from whoever is selling here at 70 cents. My guess is that the bear story goes something like this:
The company has a lot of promise but no cash and no earnings. They are going to have to add substantial expenses ahead of revenue in order to pave the way for sustainable growth. In order to do this they will have to take on massive dilution. Additionally, there are hundreds of software companies out there who believe they are on the edge of gaining access to a huge market and huge revenues. The vast majority of these companies fail. When Cistera can demonstrate that its ability to generate substantial revenues is more than just a goal, then the skeptics will take notice and flood in. But until they they remain skeptics.
I think the company needs to address this concern in the next earnings report. |
