Hi Jaime...
For what it is worth, I think that SMU is running profitably as we exchange these notes. Moreover, my guess is that you will see a small upward "surprise" in the March 31st quarter numbers, most likely to be released on April 29th or 30th.
Matter of fact...I don't think you can totally rule out "breakeven", though that isn't a prediction on my part.
From the standpoint of investment value, however, we still are at the point where the most important issue is the signing and announcement of another ITS order. With one, the stock will be up nearly a handful of points; with two, it will be better than that.
Despite SMU's manufacturing inefficiencies in 16G...now well on the way to radical improvement, as it is running in the black even prior to the plant consolidation in San Diego...the ITS business has never seemed to be a "problem." Moreover, with equipment set to run the production lines at roughly 120 units per hour, it is clear that the company only needs to add facilities (with already functioning equipment sets) to raise total units manufactured. Profit margins should be stable around 25% or perhaps a touch higher.
In short...the market will look *through* the hiatus before the new ITS contracts start to deliver, recognizing that this will radically alter SMU's profitability. With a multitude of contracts (if we are so lucky!) the shares might well trade like your beloved internet stocks.
We can only hope. <S>
Have a great weekend. |
