To all:
The delta on QC is not whether or not it should trade at some insane multiple (like 60x earnings), but whether or not its currently trading at something like 20x the forward twelve months.
The Street is **brilliantly** annualizing the coming second quarter, and pulling numbers down to something in and around $1.50. Hell hath no fury like a blind-sided sell-sider! Funny though, Q2's revenue will be flat (to up modestly) with Q1, and a big portion of the earnings shortfall will be on the cost side (i.e. higher R&D & SG&A in anticipation of a bigger business, plus something between $8mm and $10mm in incremental selling expense due to Superbowl promotions and CTIA). This, as I've said before, hardly constitutes a business meltdown.
What's really amazing is that people seem to be completely missing the infrastructure revenue ramp and Globalstar gateway shipments during the second half. This is extremely important because the company's poor manufacturing margins are due primarily to losses in the infrastructure group. Were this segment to break even (or heaven help us, turn a profit), the underlying profitability of the ASIC, handset, Omnitracs and contract services businesses would become quite apparent.
The bears are so myopically fixated on Korea that they haven't bothered to analyze the rest of the business, or look at the rest of the world. Their risk, to steal a phrase from DMG, is blinding.
Best regards,
Gregg |
