>>I am utterly dismayed that the company did not preannounce or give lower guidance to the investment community as soon as it became obvious to them that the quarter was not going as expected. We now have to deal with analysts who were not communicated with, are no doubt highly irritated, and who will take it out in the form of downgrades and advice to their clients to sell out, as their own credibility is at stake.<<
Trufflette -
I know I'm responding way after the fact, so no doubt some people have already defended KE to you. I won't do that.
I just wonder whether a pre-announcement, or guidance to analysts causing them to lower estimates, would have had any effect other than making this selloff happen sooner. I have been in this stock long enough to have seen the effect of even one lowered estimate.
The post to which I am responding now does contain a lot of very good points, including the one about the Street not being kindly disposed to this stock. Of course, the Motley Fool is more responsible for that than anything, since when they first started getting a lot of attention, they openly said they were smarter than everyone on Wall Street, because they knew Iomega was a great buy and the hot-shot analysts didn't.
Of course, Kim Edward's "who cares about the stock price, I'm busy building the company" stance hasn't really helped.
I will say, at the risk of being repetitive on this point, that when the split was announced it wasn't quite as crazy as it seems now. At that point, the board felt that they had a blockbuster quarter going, and the stock had momentum. The stock looked like it was heading into the mid-thirties at the time that the split decision must have been reached. Yes, it's weird to split a stock in the thirties, but we have no reason to think that the board knew the company would miss its numbers for the quarter.
And as long as I'm already beating this point into the ground, I'd like to point out that the decision to split was not Kim Edwards' alone. The entire board must vote to approve a split.
Another really good point in your post is that the stock was finally starting to get some respect, and here we are back in the same position we were in last January. Low price, low expectations, and no respect.
For that I think KE and the board share the blame.
I also believe that if the company executes well over the next six months, ships all announced products and turns in two great quarters in a row, the respect will start to come back. But it has to start with the company beating the CURRENT estimates for this quarter, not the lowered estimates which are surely forthcoming. It would be better if they beat this quarter's numbers, though perhaps I am insane even to hope for that.
- Allen |
