Jules and others,
I am new on SI and this is my first post.
I appreciated your question to Jack Kay on the Phoenix conference call. It is exactly what needs to be answered. I would be interested in his response, because I have some thoughts on the matter and would like to see if I am close. My thoughts are as follows:
Although PTEC does not have much competition, they still may have a hard time holding price on the PTEC high end BIOS. I believe this is because the customers still have leverage. For example, if I was a customer I would use in house development teams and the previous Award BIOS as competition. I believe PTEC would rather sell a $2 to $3 BIOS instead of 50c BIOS. I wonder if PTEC has mature account manages who can effectively negotiate price.
PTEC just presented to the AEA and we didn't get any movement in the stock price. I know Jack is being conservative, but again your question is right on the money. How come they don't say they are going to beat their numbers because of the healthy state of the industry?
I was surprised last quarter when they received significant revenue from Compaq and their revenues were flat! I know the company answer: we had a shift in customers market shares, Asia, and we lost Digital. The problem I have is that I never heard of Digital as a top customer, but Compaq was mentioned first in their last conference call so I expect they received significantly more revenue from Compaq than DEC. At the same time PTEC's customers seam to be growing. ie: Dell, Intel, Compaq and HP. Where did the revenue go?
Obviously the answers are to hold price and sell their added value products like ROM Pilot and the pre boot security software. I think this strategy is brilliant, but how come the market doesn't recognize this?
I believe the PICO and IP group are significant and will continue to grow, but with increased competition. I also agree with others in this thread that if these divisions are spun off they would have a significant market cap. And of course, there is the cash in the bank and a perfect balance sheet. I wonder what Peter Lynch would think.
PTEC is one of my biggest holdings and I just bought additional shares at 7. I like the fact that these shares were bought below what Jack and Bob paid. I'd like to buy more, because I still believe PTEC has significant potential, but I keep asking myself: What does the market know that I do not know? I like to think that the answer is obvious and Jack recognizes it. PTEC has a significant credibility problem and the stock will not move until they meet or beat analyst expectations. With the bar set low, they need to make their numbers this quarter. With Intel's strong sales announcement, this should be a no brainer.
So why isn't PTEC at $15, and what do we know that the market doesn't?
jd |
