Hello...Don, First, let me preface my comments by saying that I thought the stock would drop some today but... nothing like it has. Moral: I am guessing like everyone else. Having said that, I think today is way overdone. The fact of the matter is management prefaced the call by saying "we have a very conservative business model". They then said, in effect, we are kicking butt and taking names in FR and ATM. Anyone who expects those markets to stop growing anytime soon is in for a big surprise.
While FR sales are flat, ATM is growing. IMO, the astute investor will understand the implications of the doors they opened Q4. They announced ATM deals with 2 of the 3 biggest telcos in the world. (AT&T, NTT) and a big deal in the most populous nation in the world (China Telecom). Other seeds were planted (Bell Atlantic, Nynex, GTE, Bell South) that offer huge opportunities.
Further, IP Navigator, AX, and Sahara products should, according to management, contribute meaningfully this year. There is no doubt in my mind they will double earnings this year. None. Not even a little. Not a snowball's chance in h*ll they don't double earnings.
I expect managment to get DSO under control after this blood bath. I understood management to say their challenges going forward were to manage transistion from a one product company to a many product company AND to meet the challenges of being the "leader" in the fields they participate in.
I am a little surprised CSCO did not react worse to this news. They paid $4 billion for a company that had leading market share in FR and ATM and now apparently does not. I can't think of one RFP where CSCO, NN, and CSCC butted heads and CSCC did not either win it outright, or get the lions share. I'm not saying it has not happened, I am just not aware of it.
CSCC will be fine. Hopefully all the momentum players will get off the bus today. I will double down.
Good luck,
Daniel
PS: They mentioned AT&T will be testing IP Navigator next month along with another IXC which they did not name. That other IXC, I expect, will be another BIG door opened. |
