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Technology Stocks : Sequans Stock Discussion

SQNS 6.210

+4.0%

Nov 5 3:59 PM EST

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From: GaryMi	7/26/2020 1:02:18 PM
	1 Recommendation Read Replies (1) of 222

Here are my thoughts on Q2 results. G.K. said this on the last call, "we expect revenue of at least $12 million in second quarter, despite the challenges on the supply chain where we may face some shortage of components required to build our modules." He reiterated this $12M number later in the call. Earnings Whisper has consensus at $12.00 and $(0.22). We all know George has a habit of optimistic forecasts followed by disappointing results. But I think it is worth noting his choice of phrasing "at least $12 million" is rather unusual. Recent guidance has been much less specific, phrased something like "revenue will be flat to slightly increasing over the prior quarter" or some such. They also pre-announced in Q1 when they were going to miss by about 500K, but nothing this quarter. I think we have some positives that I hope will allow SQNS to make or exceed their target. I'll use quotes from recent calls to highlight these where possible. 1) G.K. 2019 Q4 earnings call. "we expect to see Cat 1 revenue back in growth mode in the second quarter of this year (2020)." But there is some overlap in components between Cat-1 and Cat-4 module components so we will probably see some cannibalism of Cat-1 to ship the higher cost Cat-4. 2) G.K. 2020 Q1 earnings call. "The vertical deals you know, I was talking about big deal that we had to work on since last year. And now I was seeing on the call that we should close it this quarter. I'm more than 90% confident that it should close this quarter. This is really more than two digit number and it has as well as some upside down payment." 3) G.K. 2020 Q1 earnings call. "We continue to have a good pipeline of opportunities and are hopeful we can finalize the large vertical deal in the satellite space we have been working on before the end of second – this quarter." I presume this is the same deal referenced in #2 above. 4) They raised about $30 million from the offering and closed Q1 qiuth about $6M in cash but they had a number of other adjustments in loans and credits that were not reflected in that number. So I expect we will be north of $30M in cash. 5) Cat-M shipments should continue to increase although this has been painfully slow. We have had no significant press releases since the NXP deal in March so we seem overdue. I would not be surprised if they announce this satellite deal in the earnings release, on the call or immediately after. One of the members of the board, Wes Cummins, purchased 300,000 SQNS shares on the open market on June 10th at $5.85 a share. He knows a lot more than we do. Other than the freebie options he gets as a director this is his only SQNS holding. Of course he knew about the new share offering which closed on June 4th. Funny how deferring a very large stock purchase until after bad news is not considered a form of insider trading. We will know a lot more on Tuesday. I added another 10K of shares last week but I'm taking the long view.

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