To the Bow Wows (Continued):
My personal interpretation of these facts is that we will continue to see steady increases in sales and orders for the existing product lines quarter over quarter. These increases will be supplemented in the next 1 to 6 months with new product introductions which will accelerate IDT's revenue growth to significantly above the industry average and 3-4 years form now they will be a $1.5 to $2.0 billion company with a stock price that reflects this accomplishment. Worst case, the strategic plan doesn't work, they reduce R&D spending to be more in line with industry norms, they reposition themselves as low cost producers for high volume products and continue to dominate small niches like specialty memories, and they would emphasize there process technology leadership. Under this scenario revenue grows at the industry average (20%) and the stock price still triples from current levels in three years. The only way to classify this investment opportunity is as a no lose proposition. Selling the intellectual property of this leadership company near net book value simply because they have chosen to spend an additional 80MM per year in R&D above the industry norm in an attempt to accelerate growth above the industry average and because their point in time utilization of existing capacity is low (even though they are a segment leader in a high growth industry which indicates that this imbalance will be short lived) can only be characterized as an inefficient market opportunity which can't last much longer.
In conclusion, any of you who want to call this company a dog should first collect a set of ACCURATE FACTS about the company, its competitors, its strategy and the industry and then present your case. I don't mean stock price trends, I mean business facts. Based on stock price trends every company in this industry was trash last summer including INTC, LSI, AMAT, ALTR, XLNX, etc., etc. If you are calling the company a dog, because you are a short term trader and YOU made a poor timing decision about when to purchase the stock, take responsibility for your own decisions. You're the dog for not doing your homework and understanding where the company was in terms of its new product development cycle, order leadtime cycle, capacity cycle and competitive conditions. If you still want to blame the company even as it is poised for a resurgence in revenue growth, then go ahead and sell, you don't deserve to reap the rewards that this company will shortly provide.
There, now I feel better.
K |
