Fascinating news today. JPMX to delay its 2MM share secondary due to "market turbulence." Company says it will re-examine things "in a few months" and that bank financing and its own reserves should be enough to fuel expansion for the time being. Let's take a closer look at this statement:
(1) JPMX was to do the secondary in early December, with an estimated price of $26/share (as provided in the SEC filing)
(2) JPMX has bounced smartly since earnings last week; if JPMX was really concerned about "market turbulence", why didn't they withdraw the secondary while stock languished in low '20s/high teens for two weeks? Why didn't they say something immediately after earnings were announced? Why did they wait a week, and wait for the stock to pop up more than 25% since earnings were announced about a week ago? In fact, at today's closing price (I believe that the announcement was made after the close), JPMX is above the proposed offering price!
(3) IMO, the company must think its stock will be worth more than $26 a share "in a few months." I hate to sound foolishly bullish, but isn't JPMX telling us that it is in the middle of a huge quarter? The problems last Q were attributed to "transition" issues with the products of some major clients, not with JPMX-specific issues. Its big clients just needed less product for a short while, that's all.
When these issues were resolved, there might have been a substantial backlog of orders. Take a look at the huge increase in inventory at the end of last quarter (in the Q earnings report). Was JPMX stocking up to meet imminent demand? Or were the products just not selling? The tone and language of the Q press release seems to indicate the former -- "everything back on track", or whatever the Pres said.
On the other hand, all the talk of Asian weakness, European weakness, etc. has me a bit skittish. Moreover, if this Q was falling apart, it might still be too early to preannounce, in hopes that it still may recover. If the news were bad, they would probably have to pull the secondary for legal reasons.
Of the two options, I opt for the bullish one. Of course, I am long, so it may just be bias :o) Any thoughts?
Matt |
