Here's what the Motley Fool has to say.
Today three Fool companies did announce earnings, but like most Foolish investors out there, I wasn't plastered to the monitor waiting for them to roll across the screen. Alongside working on content that included the new Boring buy, answering email, reading and posting on the message boards, attending meetings, updating numbers, and not having lunch, I hardly got to glance at our companies' earnings reports until early evening. I see that Lucent (NYSE: LU) and KLA-Tencor (Nasdaq: KLAC) both rose sharply, but Innovex (Nasdaq: INVX) was down a fraction, so of course let's go to Innovex first to see what's up. Or not up.
Innovex announced earnings per share of $0.50, one penny above estimates and about 17% above the earnings per share achieved last year. Sales rose 13% to $33 million. Gross margins rose above 42% for the quarter, up from last year. I did dial the conference call and listen to what I could before writing (you can reach the full recording at 1-800-633-8284, code 3605232, until 1:00 p.m. Central Time on Wednesday, the 21st), and the gist of the message is that the recent slowdown is continuing and looking ahead ("visibility" of future performance) is difficult, because drive makers are ordering product later and later before they need it, trying only to order what they need to meet demand.
During the quarter just ended the company shipped about nine to ten million lead wire units per week, but for the current quarter it looks like volume will dip below nine million per week. The company doesn't see sequential growth in the current quarter, or year-over-year growth. (Analysts are already calling for a 20% decline in earnings per share for the quarter, so no big surprise.) The company stated that it is at the whim, still, of the industry (sounds like the networking and semiconductor story, or automobiles -- because it is like those, whenever those sectors experience slowdowns). The one good deal with Innovex, however, is that the company, with 40% gross margins, will remain adequately profitable (no problem-o) while peers in the drive industry are dropping profits like flies.
Innovex's cash rose above $46 million, representing over $3 cash per share. The balance sheet as a whole looks very fine -- accounts receivables are down, inventory is stable, assets are up, shareholders equity is climbing. What we need to do here, more or less, is wait for the industry to turn around. When we bought the dang thing we knew disk drives where in a crunch; we bought the stock far from its high and at a decent valuation, which has helped us not get blasted for 50% or more -- which is how much most disk drive-related stocks have fallen. Still, we're not celebrating the loss to date. Perhaps those sub-$1000 PCs will help out Innovex before too long (definitely in the long term) as it has helped out AOL. What we essentially have is a bunch of disk drive makers (a small handful of the three to five biggies) that were too aggressive last year and are still pushing out inventory. Like having too much ice cream in your freezer, it's a temporary problem. How temporary? Hey, I've seen ice cream sit in a freezer for a few years. |
