Well, the ugly little news is out. I guess the question is, how much "know" is built into the price? Certainly the market wasn't expecting anything good. This is what the shorts have been expecting.
Revenues are down, but in their defense, Asia could have been a factor. It's hurt bigger companies. And certainly that little mutiny in the sales force over the legacy products didn't help. I can understand the sales forces position, since those products are what has been buttering their bread.
But anyone involved with this company must know that those legacy products aren't going to take this company anywhere. The company will sink or swim with the new products, and the sooner they concentrate on them, the sooner they will get where they want to go. They don't sell themselves, unfortunately. They have to market them.
Actually, what bothered me most in the balance sheet was that operating expenses were up over 2 million from last year. That's essentially their loss for the quarter. I would hope that they are spending that money toward selling the new products, but there is no assurance that that is the case.
Believe it or not, I think there are some positives here. It doesn't appear to me that they are trying to hide anything or sugarcoat it. What you see is what you get. They are looking at 2 million from Net+Arm this year and 12 million next, with the potential for more. And they mentioned 14 VARs selling IQX-200.
But foremost of course is the statement that 21 Telcos are in various stages of evaluating the Gigamux. I am actually a little shocked at that number. Hell, I wasn't even aware that there were that many Telcos. I wonder how far along in the process they are with the lead Telco. Even if they only achieved a 25% success rate, that would be significant.
A big question is how long could they survive at the present loss rate? According to the release, they have 3 million cash balance plus 7.5 million from the convertible. And they still had 15 million left on their line of credit. That's over 25 million. That should be more than enough if these new products can take off. If not, then it don't matter.
Well, hindsight says I would have been smart to sell in the 5's, and I wish I did, but it's too late for that. I will hold on now, even though many others won't. I have come to terms with this as a long shot reclamation project. I may even save my pennies and buy more if it gets real cheap.
Dennis |
