Bob, some thoughts.
The conference call was a disaster. It's one time every 3 months when management has an opportunity to explain their business, and they didn't do it.
1) Hagedorn's resignation seemed to kill any interest in the companies business. Analysts get to know what to expect out of a CFO, and were just getting comfortable with Hagedorn. The new guy will need some time to build those relationships. Since he took the same job with a smaller company, it looks bad for C-Cube.
2) Alex said that DVD would not be big for C-Cube until it was recordable. He didn't explain what he meant. It would be easy for someone to think that C-Cube has lost its position in the DVD-ROM market, and will not be able to compete. I believe he meant that the DVD-ROM market was not taking off, and not likely to be as big market as expected. 2Real will be ready by Christmas, but really won't amount to many units until 1999. Some investors only see C-Cube as a DVD company.
3) By not disagragating the business into C-Cube's 5 different product catagories(VCD, DVD, settops, Divi, and encoders), they created a lot of confussion.
4) Buying back the bonds should have been a highlight. Share buy backs are almost always well received by the markets, and a sign that the company believes that its stock is undervalued. The announced buy back should add(less shares, and reduced interest payments) $.02 to EPS per Q, going forward. Analysts will need to raise their estimates. At these prices, I think C-Cube is still buying back bonds. We won't know how many until the Q3 report.
How long should you wait? I can only tell you that I expect higher earnings for the next 3Qs, with or without DVD. How the market reacts to those earnings is an open question.
C-Cube's board hasn't thrown in the towel. If they do, they will sell the company.
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