Tim,
Thanks for the thoughtful post. Always good to get
posts that make one "think through" the stock, rather
than react on emotions. Easy to say, but sometimes
hard to do. Nonetheless, all of us have to start to
use our reasoning after this last painful selloff.
To make it simple (I'll try at least), this is the way I look
at our situation:
A few weeks ago, COMS was in a good position having built
up *some* credibility with the Street and investors.
The WS conference on Jan 20 (MS I think) was a success, and the
consensus of the major quality analysts was very positive.
Presently, the stock dropped in price terribly (over 30%) on
no "hard evidence". Not even a pre-announcement. This
to me is what's most disappointing, but I take it as another lesson
to be learned about the Street. Stocks can go down without
a pre-announcement; just general fear which may or may not
be unsubstantiated by "hard evidence". So, COMS is in
the "dog house" again.
Also, it seems that what the Street is most worried about
is the present COMS back-ended quarter (which means that historically
for COMS, about 50% or so of sales are in Feb., the last
month of this quarter), worried that last month (jan)
is possibly worse than expected for hi-tech sales, making
this month possibly even more difficult on sales, and therefore possibly falling short of the 36 cent forecast (earnings report
to come out around March 23). The Street
needs visibility for this quarter and it just doesn't have
it now. Without visibility, the Street becomes ultra-phobic,
especially with a stock with the history of COMS.
In hindsight, IMO, this has been the fear which prevented
us from "breaking through" $48 barrier last month - the
uncertainty of jan and feb sales.
So to summarize: A few weeks ago, COMS was in an "OK" position,
and now it's in the "dog house" with shorts and potential
longs salivating at thoughts of $25/share. And we are all
waiting to see if COMS has a "problem" or not with Jan and Feb
sales. If not, then COMS will go on to future glory
afterwords (especially, if as they say, the following quarter
will be a strong one). If COMS misses estimates, then
it could be in the dog house for a while (even though COMS
has been honest with the street about this quarter, and
there may be a future AT&T contract breaking out soon, which
will solve all our problems; but I don't want to get into
the "what ifs" about the future in this post).
IMO, the thing to focus on for the moment, is the fact that
a lot depends on how Jan and Feb sales
have and will be. It seems that the Street is somewhat
undecided, ambivalent, and *worried* about sales being worst
than expected. To me this is the key factor we should be
focusing on. JCramer wrote, what I thought, a good article
(Let's Let the Real Tech Hitters Speak; 2/9/99 7:22 AM ET)
explaining this difference of opinion on the Street. For
the most part, I thought December went well, and so did Jan.
I was surprised to hear about fears of Feb. from what I
have been reading the last month or so. This is what
I'd like to see "hard evidence" about, and IMO, this
is what the street is predominantly focused on at the
Montgomery Conference going on now.
A couple of companies, Tech Data, SCI, AMD, etc have done
poorly recently. Is this a COMS problem or not? I don't
think so, but we need some "hard evidence" to know for sure.
regards,
joe |
