Genesys Telecommunications traded over a range of 21 7/8 to 27 1/8 yesterday (!). It closed today at 25 3/4, up 5/8. It has been down sharply over the last week or so (from 35). See chart:
techstocks.com
I spoke yesterday with the new CEO, Mike McCloskey. He told me that there is no other significant news (besides the recent earnings report, and his appointment as CEO) that should affect the stock price. Genesys management is trying to increase contact with investors and a "road show" is planned. His message was basically upbeat.
McCloskey made the following points:
1. He has talked to the 20 largest institutional investors in GCTI and they are not selling. The selling pressure seems to be coming from brokers and other investors who have been spooked by the recent decline (which has been shared - though perhaps to a lesser extent - by many other NASDAQ stocks).
2. His transition to CEO has been in the works for some time and he has been assigned increasing responsibility since he came to Genesys in 9/96. This transition was amicable, he added.
3. He believes the company is on track in its plan for growth.
We often see the price of small stocks over-react to news and I believe that this is the case here. Besides that, the news for Genesys has not even been bad news. After-all, they beat consensus earnings. and they appointed a new CEO who was being groomed for the job. What's so scary about that?
This presents a buying opportunity in GCTI, IMO. I added to my position today.
Even with its recent plunge, the P/E of GCTI is high (about 85 on TTM), but is justified if they are able to maintain their projected hyper-growth (about 94% currently).
P.S. For a (not yet updated) profile of Mike McCloskey, see:
genesyslab.com
Michael McCloskey, Chief Operations Officer, Chief Financial Officer, and VP of Finance and International Operations
Mr. McCloskey joined the Company in September 1996 as Chief Financial Officer and Vice President, International Operations. From May 1995 to September 1996, Mr. McCloskey served as Vice President, Finance and Chief Financial Officer at Network Appliance. From September 1993 to May 1995 he served as Executive Vice President and Chief Financial Officer at Digital Microwave, a telecommunications company. From September 1991 to September 1993, Mr. McCloskey served as Chief Operating Officer and a member of the Board of Directors of Wavefront Technologies, a 3-D graphics visualization software development company. From September 1986 to September 1991, he served as Chief Financial Officer at Everex Systems, Inc. Mr. McCloskey holds a B.S. in business from Santa Clara University.
McCloskey replaces:
Gregory Shenkman, President & Chief Executive Officer
Mr. Shenkman co-founded Genesys Telecommunication Laboratories, Inc. and has served as its President, Chief Executive Officer and director since the Company's formation in October 1990. Prior to co-founding the Company, Mr. Shenkman was employed by Northern Telecom and Harris in various positions of responsibility. |
