Bunty, I did not get a chance to port the note yesterday. Any how, I spoke with Gary Wolf, the CFO of Stanford Telecomm a couple of days ago. He was very polite, patient and courteous in answering my questions. He, like many of us, is puzzled by the recent sell-off despite good financial showing in the just completed quarter. He is not at all apologitic about the fact that they just "meet" the estimates. He is right, they should be. Let us face it, it is the whishper numbers thing that is causing a lot of grief to technology companies lately.
My talk with him reinforced my fundamental opinion on the company outlook. Even though Gary wasn't specific about any thing, from our conversation I gathered that there is a good POSSIBILITY that they will announce a couple of potentially huge contract deals in the cable modem and satellite communication fronts. These deals will come out of the strategic partnerships they established earlier with Hewlett Paccard, Intel and TRW. My GUESS is that it may happen in about 3 months or so. I mentioned about the rumor on a possible deal with Motorola. He clarified that they DO NOT have any partnership with Motorola on satellite communications. With regard to backlog, he indicated that it could improve in the next quarter or so without elaborating further.
Here is the summary of my assessment - STII is a good company with great technology and patent base. They are in business for about 20 years now. Not one of the companies with a lot of "glamor" but with a solid foundation in existing operations and growth plan with huge potential. I think the stock will get its share of glamor eventually.
With regard to current sell-off: I also have a sneaking suspecision that market makers drive down the stock prices of quality companies like STII by dropping the bids dramatically for establishing good inventories for themseves at lower prices. First, it drives the earnings players out, then the stop-loss players and then the faint hearts.
BTW, I did ask Gary about the thin float and the grief the market makers are causing the investors. He said the company is sympathetic to this concern and hopefully they will do some thing about it soon after they have some thing to announce. Does this sound encouraging? The same thin float will work to your advantage if and when that happens.
Good luck!
-Mohan |
