I've listened to the call. And I have just a few notes.
First, Roger Ross pointed out that if you back out the inventory write down, the increase in their allowance for bad debt, their write off of existing bad debt and their extraordinarily high R&D expense, Ross was actually profitable on an operating basis. Yipee.
Ross also mentioned that their new 200 Mhz system was available for only a few weeks during the quarter and hence has yet to show any real impact on revenues or profits. He also said that Ross would be introducing its new 64-bit system (the so-called Viper product) sometime late this quarter or early next quarter.
It is demand for these higher performance products, Ross said, that caused the dramatic decrease in demand for its lower clock speed products. Responding to that dynamic, Ross has written off this inventory lock, stock and barrell.
I also got the strong sense that Ross will get its additional financing. The company plans to hold another conference call during the first week in March, at which time they will discuss the company's strategy for next year and announce new products and perhaps (long-suffering investors hope) an R&D partnership.
Ross said they have cut a lot of the fat out of the company. But I wonder if they haven't also cut into the muscle. John Rasco, Ross's IR rep, introduced himself on the call as the company's director of marketing. And of course there is the well-timed departure of former CFO, Dave Zeleniak. And an analyst asked about defections of key design engineers, to which Ross responded that no one who he has not wanted to leave has left. I'm not convinced this is not a problem.
All in all, things look pretty grim at the moment. I have listened to every conference call for the past year. And every one has sounded an upbeat note. Yet every quarter the situation has continued to deteriorate. It is now difficult for me to believe anything Roger Ross has to say about turning this thing around. Does this mean he should be sued by his shareholders (which has been suggested by others)? Not the way I see it. While I believe investors have good reason to doubt Ross's skills as a businessman, I don't question his sincerity.
Three months ago, this looked like the best $4 dollar stock around. Who knows, maybe this is now the best $2.50 stock around and we have finally hit rock bottom. But then again, for those of us who continue to hold our shares, perhaps in three months we'll be looking for some reason to believe this is the best $1 stock around.
I heard Scott M, who in the past posted frequently to this thread, on the conference call. Scott, are you still around? If so, how 'bout sharing your thoughts on the Ross's quarter that was and your outlook for the future?
- Peter B |
