How much lower will Ancor Go?
With a book value of about 1$ per share I doubt it is going much lower; maybe we will see levels near the 4$ or high 3$ range.
As for the last quarters financials...I really think management was trying to take a huge bath last qtr with the 250,000 charge for O'Hara' the 500,000 extra charge for obsolete inventroy, the sales allowance of 300,000 for product returns, and the increased depreciation/amortization expenses (vs. last years norms). If we take all these "bath charges" out of the equation we would have had earnings in line with second quarter's -0.12.
Ancor has little Long-term debt 178,370 and small current liabilities of 2,039,896 vs, current assets of 10,370,713. This results in a current ratio of about 5 where most beginning high-tech Co. are around 2 or 3. Cash flow from operations is improving quite a bit and so are the inventory turns and Ancor's collections on Accounts receivable. Another positive note is, Ancor has been paying on it's accounts payable about 442,000 over the past 9 months; something unusual if Ancor were going out of business.
I don't think we can count Ancor out yet; I think that if Ancor's switch is as good as they have led us to believe that Ancor is rather attractive at these levels; even based on their old switches.
Didn't Cisco buy that GE company for 200 million when the GE Co had no sales and only prototypes. Is Ancor only worth about 55 million? Maybe.
Maybe not,
Eric |
