Hello Fenton, good to hear from you again. Sorry for the delay in getting back to you; lot of meetings today kept me away from my computer. I don't know the size of the Q4 charges (i.e. the inventory write-downs), but, like you, I look at them (hopefully) as non-recurring and trust that this write-down is conclusive with no residual. Assuming that proves to be the case, and operating earnings or losses are "modest" (to re-use that already abused adjective), this probably is a great buying opportunity. I agree with you that the ~$5-5.50 range we saw recently was virtually book value and perhaps a rare bargain depending on impending events.
I am just anxious to get and review final 96 numbers then get some answers to several questions that I will have. I'd like to raise my confidence level in management's (or others') ability to project 1997-98 revenue, earnings, and cash flow growth, especially with sales, marketing, international and other expansion ramp-up.
Before we heard comments about modest profitability for Q496, my expectations were for break even or slight Q4 loss with higher expectations in 1997. Had management been better at setting those expectations, recent stock price volatility might not have been as severe. The investment community hates uncertainty borne by such false expectations. Unless unexpected, reoccurring negatives surface, my horizon is and has been 1 to 2 years for 100% returns from these levels with some overbought/oversold volatility along the way, perhaps creating some option or other trading opportunities to enhance returns.
Averaging down may be in order but haven't done that yet. May do another round of covered calls after expiry next week just to help offset time value of $$ invested. Meanwhile, we should have some numbers to look at before the month is out. -Kent
P.S. Just noticed OREX closed up 3/4 on 611,000 shares; nice bounce. Wonder if somebody already has answers to some of your questions? |
