Hi Tim, the NG bull market carries forward and it does
have some secular themes of being a clean fuel etc.
what's interesting is that if NG goes back to 3 bucks from
here and stabilizes between there and 2.75 next spring and
summer, the Top NG companies are going to be swimming in
cash, some on like Susan Byrne who is really running the
number probably have numbers like selling for 3 times
cash flow, PE's under 18.
If we spend much time up here above 6$ these companies are
going to produce some bigtime cash streams... whether
they ship the money down to the bottom line or do
something else like go on an asset binge, remains to be
seen.
BR is probably picking up because they have hedges come
off the table where they have been short futures to
lock in price levels, they have been short futures, but
those contracts are expiring, so they are selling NG
at much higher prices.
here are two thoughtful articles on PUMA and LU
I agree very much with the LU thinking. Puma is much
lower visability.
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14:50 ET ******
Pumatech (PUMA) 8 17/32 -3 17/32: PUMA shares are off 30% and just established a new 52-week low after reporting Q1 results after the close yesterday. They didn't miss their bottom line, in fact, they beat the consensus estimate of a $0.09 loss by a penny. By most estimates, PUMA also beat their top line, but at least one analyst was disappointed by the $9.9 mln sales, which represented 54.8% y/y and 9.9% q/q growth. Two Strong Buy reiterations (CIBC and Frost) and two downgrades followed the report, USB Piper Jaffray and Wedbush Morgan both cut their ratings from Strong Buy to Buy. Wedbush Morgan cited a weaker-than-expected quarter in Pumatech's Mobile Application Platform (MAP) growth. Indeed, the 11 new customer signings, were down from last quarter and well below Wedbush's expected 21 new customers. However, overall MAP revenue did show 10% sequential growth in a weak wireless environment. MAP is seen as a key revenue driver for PUMA and the lower-than-expected customer count is cause for concern, but not panic. MAP revenues accounted for 33% of the total, and going forward, management expects sequential MAP growth in the low double digits. Enterprise sales were up 10.2% to $4.72 mln, and again management expects low double digit sequential growth in Q2. The quarter also included the acquisition of The Windward Group. While only two weeks of the quarter included combined Windward results, the Professional Services sequential growth of 18.9% is a precursor to future strong growth in that business segment. The Windward Group adds about 50 employees to the previous total of 20 for the Professional Services business. While the services business will crunch gross margins slightly, it will also see the strongest sequential growth in the next few quarters as a result of the acquisition. Gross margins may slip to the 78-80% range over the next few quarters, but PUMA maintains the highest GMs in their industry. While some analysts had predicted a $10 mln quarter, PUMA's Q1 results were not that bad considering the slowdown in the wireless environment. They did not issue negative forward guidance, in fact next quarter's $11.3-11.7 revenue estimate is in line with the models we've seen. Today's sell off appears to be overdone, however the wireless sector shows few signs of being resuscitated in the near future.- Matt Gould, Briefing.com
13:38 ET ******
Day Trader : Lucent (LU 17 3/4 -3 3/16) has not come across traders' radar screens many times this year. Issue has been in a steady downtrend since mid-July, rarely lifting its head to attempt even a short-term rally. News out today that the company has identified a revenue recognition issue impacting approximately $125 mln of revenue in its already reported Q4 (see 09:28 Story Stock) has sent LU shares stumbling to new 52-week and 3-yr lows. On a year-to-date basis, LU has retreated 76% as this widely-held tech bellwether has come under institutional distribution. The heavy mutual fund selling has been based on a loss of confidence in the company, after LU has rattled investors with four profit warnings and, of course, today's news. Typically, when revenue recognition issues arise, the first thought is that the company is cooking the books. In Lucent's case, however, this appears to be a simple issue of the company's management team taking a more conservative approach to booking revenues. Move demonstrates that new CEO Henry Schacht is anxious to restore the company's formerly sterling reputation by ridding the company of questionable practices. When attempting to turn around an enterprise, one of the last things you want is the suspicion of aggressive accounting hanging over your head.... In this analyst's opinion, LU announcement is a positive in that it puts company back on track to restoring credibility. Unfortunately, action is not sufficient to reverse the negative bias in LU shares and is only the first step in addressing layers of operational issues.... Why is a broken stock like Lucent appearing in the day trader column? This analyst's job is to scour the market for tradeable trends and price set-ups. In the course of that research, often come across situations that offer no value to the trigger-happy traders, but may be of interest to the buy-and-holder crowd.... History has shown us that companies like LU don't just go away. Lucent is a authentic company, with bona fide earnings power and real (albeit capricious) revenues. In fact, when these companies turn around, they usually come back with a vengeance, with respect to the financials and the stock price.... Given that the short-term outlook for LU remains murky, it's quite possible that we could see this stock fall into the low-teens. History has demonstrated that real companies in the tech space don't trade at such depressed levels for long. A move to the low-teens would make the risk/reward to those investors with a 2-3 yr time horizon compelling. Upon the reacceleration of telecom spending, Lucent will find new life, as it again becomes a favorite of institutional investors. Right now, LU is being left for dead. History tells us that the company is simply in hibernation. It is when good companies are out of favor that long-term investors should be scouting stocks. -- Damon Southward Briefing.com |
