Looks like a cash squeeze. Why wouldn't Ingram pay these guys. Are returns a problem?
NEW YORK (Dow Jones)--CyberMedia Inc.'s (CYBR) third-quarter days sales outstanding were higher than previously reported because of the sale of $4.8 million in uncollected receivables, according to an amended 10Q filed Thursday.
CyberMedia's days sales outstanding, or DSO, rose to 120 days in the quarter, up from the previously reported 101 days, because of the sale of the receivables owed by distributor Ingram Micro Inc. (IM), according to a Friday morning research note from Wessels, Arnold & Henderson LLC analyst Stephen Sigmond.
However, the rise in DSO, an indicator of receivables, does not indicate excessive channel inventory and most of the $4.8 million in receivables has been collected, Sigmond said in his note.
"We are retaining our positive recommendation because we believe the DSO issue is almost entirely due to Ingram Micro and is related to timing rather than collectability; inventory in the channel remains at reasonable levels; and overall revenue growth prospects remain favorable," Sigmond said.
Sigmond lowered his rating to buy from strong buy.
The research note was disseminated on First Call Inc. before the market opened. Following three minutes of trading, CyberMedia was halted at 16 1/2, a 27.1% plunge from Thursday's close of 22 5/8, on Nasdaq volume of 22,200 compared with average daily volume of 252,200.
Sigmond was unavailable for immediate comment. CyberMedia executives couldn't immediately be reached for comment.
Prior to Sigmond's rating change, a consensus of analysts who follow CyberMedia rated the company a strong buy, according to First Call.
Companies may sell accounts receivable owed to them by a customer to a third party in order to get paid faster than if they had waited for repayment from the original customer, said an analyst who requested anonymity.
However, when companies sell their receivables, a process also known as factoring, they will only collect 97% of what they are owed, the analyst said.
Sigmond said he doesn't expect CyberMedia's shares to appreciate significantly until it can stabilize and reduce its DSO.
CyberMedia's days sales outstanding had been ticking up since the first quarter, when they were 91 days. During the June quarter, the DSO was 105 days, but the September quarter showed a minor reduction to 101 days until the news of the amended 10Q.
-Maria V. Georgianis; 201-938-5244 |
