Cheap Stocks, 8/24/2012 Update

We were up 5% last week. MTSL continued to run and was up another 62% last week for a 157% total gain and we took our profits on it. We are now up 17.9% for the year.

Some of our stocks are just stupid cheap—compared to their net cash on hand per share divided by their stock price.

Check this list:
RIMG 89%
EXTR 48%
GRVY 104%
CCUR 60%
SIGM 62%
ASTX 44%
CTIG 54%
MRVC 55%
ANGN 45%
AVNT 69%

Plus, EXTR, RIMG, ANGN and SIGM are all in “play” with activist shareholders either trying to get them to pay out special dividends or take them over, or they are pursuing “strategic alternatives”.

The DOW was down .9% last week, NASDAQ was down .2% and the Russell 3000 was down .6%.

No earnings last week.

AVNW, CBEY, BLIN, GRVY, and MITL are our favorites.

For the year, the DOW is up 7.8%, NASDAQ is up 17.8%, and the Russell 3000 is up 11.7%

Last week we went 11 stocks up, 11 down and 2 unchanged. Since inception we are now 57 stocks up and 17 down for a 77% winning percentage (80% is our target win %).

Since our beginning, we have closed out the following positions:
2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
2008-BDAY -39% (long overdue takeover offer-or “take-under”)
2008-DTLK +40% (third trip on this one)
2008-ILOG +26% (Buy-out offer from IBM)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33%
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL +78%
2010-CCEL +49%
2010-HPOL +27%
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%
2011-PRM +56% Buyout (1 week after we recommended it)
2011-RST +12%
2011-NINE -10%
2012-BVSN +30%
2012-TISA +137%
2012-PTIX -44%
2012-MTSL +157%

The model portfolio assumes $10,000 invested in each stock (unless we double-up–then it is $20,000), less $10 commission each way (TD Ameritrade rate).

For the 50 stocks that we closed out since 2006 (45 were winners) the average net gain was 38%.

Bridgeline Digital Inc. (NASDAQ-BLIN)-Recommended 8/24/2012)
Buy Price $1.24
Valuation $2.24
Closed down $.04 at $1.20
Down 3%, BUY

Telecommunications Systems Inc. (NASDAQ-AVNW)-Recommended 6/14/2012)
Buy Price- $1.37
Valuation $6.72 (Was $5.49)
Closed up $.12 at $1.60
Earnings announced in July. They were fine. Revenues were up 14% to $114 million and cutting through all the goodwill write-off it looks like they made $1.5 million on an operating basis. Our valuation rose to $6.72. After falling to around $1.15 the stock popped back up to close at $1.36 when it became apparent the sky was not falling.
TSYS announced an acquisition on in July. They are buying the leader in 911 communications for $37 million.
Up 17%, BUY

Aviat Networks Inc. (NASDAQ-AVNW)-Recommended 2/27/2012)
Buy Price- $2.62
Valuation $9.37 (Was $8.85, $8.31)
Closed down $.15 at $2.35
Earnings announced in August. Revenues were down $5 million to $116 million, and they made $1.2 million on a Non-GAAP basis versus $2.8 million last year. Our valuation rose to $9.37 per share. Needham reiterated its “Buy” on AVNW.
Cash per share rose to $1.62.
Down 10%, BUY

CBeyond Inc. (NASDAQ-CBEY)-Recommended 2/28/2012)
Buy Price $7.17 ( Was $7.94 before another $10,000 added at $6.53)
Valuation $29.59 (Was $29.58, $29.21)
Closed down $.39 at $8.16
Earnings out in August. They were good. Revenues were up 3%. They made a profit of $1.5 million ($.05 per share) compared to a loss of $1.8 million last year. Cash flow was positive and our valuation rose $.01 to $29.59 per share.
Up 14%, BUY

MRV Communications (Pink Sheets-MRVC.pk)
Valuation $1.73 (Was $1.73, $2.06, $2.16 (after $.475 and $.30 special dividends), $2.62, $2.79)
Buy Price October 7, 2011- $.50 ($1.27 before special dividends)
Closed at $.525 up $.015
MRVC bought back 5.8 million shares from T-2 at $.48 a share last week.
Earnings announced in August. Revenues were $55 million down from $59 million last year. They lost $2 million ($.01 per share) after a net $1 million loss on litigation settlement and goodwill write-off. Our valuation stayed at $1.73, $.30 higher than our estimate for this quarter. The big news is that they are selling 2 more European companies for what looks like a combined $24 million and going forward with their optical communications group which is the bulk of their revenues. Our pro-forma valuation, assuming both of these sales close is $1.61 with $.44 a share in cash (76% of the current market cap). Still trading at less than ½ our valuation.
Raging Capital continues to buy shares. They now own over 27 million shares or 17.6% of MRV.
Up 2% BUY

Sigma Designs Inc. (NASDAQ-SIGM)-Recommended 7/11/2011)
Buy Price-$8.49
Valuation $10.67 (Was $8.41 $12.10, $13.40, $16.02)
Closed down $.04 at $6.97
Next earnings due out Wednesday, September 5th after the market close.
Sigma and Potomac settled their war, at least temporarily as Potomac will get two Board seats.
Earnings announced in May. Still losing money but sales were up to $40 million from $36 million last quarter. They lost $8.5 million on a non-GAAP basis versus $14 million last quarter. Net cash per share fell a bit to $4.32. Over all our valuation increased about 25% to $10.67. Not bad, but not good enough to buy any more here.
They are projecting sales for next quarter (Q2) to be between $61-$67 million with 45% GAAP margins. Operating breakeven is expected in Q4 including the Trident acquisition which is expected to contribute about $24 million of sales per quarter.
So we are trading at a market cap of about $70 million (excluding cash) for a $$200 million a year chip company with 50% margins. Still pretty stupid we think. We plan to hold on for another couple of quarters to see if they can turn this around.
Down 18%, HOLD

Mitel Networks (NASDAQ-MITL)-Recommended 7/6/2011)
Buy Price- $3.04( Was $3.36 before $10,000 added, $3.95 before $10,000 added)
Valuation $13.92 (Was $12.81, $15.28, $14.04, $10.39)
Closed down $.16 at $2.74
Ugg. In August, MITL warned that revenues would be below their guidance at about $138-$139 million compared to $150-$155 million due to delayed customer implementations and the “a general deterioration of the macro environment”. Not sure what the latter part means. No earning guidance update was given. An update will be given when earnings are released on Thursday, August 30th after the market closes. They also announced that they would cut about 10% of their workforce and close “excess” facilities. We will guess that when the numbers are out, our valuation will still me at least 3X the current trading price.
Down 10%, HOLD

Rimage (NASDAQ-RIMG)-Recommended 5/24/2011)
Buy Price-$14.20
Valuation $$14.03 (Was $19.81, $22.23, $25.63, $26.45)
Closed down $.01 at $6.91
Pays $.68 a share annual dividend.
We have collected $.81 of dividends since we recommended RIMG.
Earnings announced in July. Well not really earnings. Revenues fell 9% to $18.3 million, margins fell to 45% from 49% last year and they lost $2.75 million or $.27 per share. Qumu revenues were a whopping $1.4 million. Cash fell to $62.3 million or $6.13 and our valuation fell again to $14.03
This is the worst case of management squandering its assets on an acquisition to escape being bought out and fired. We have lost over $12 on our valuation and the stock is down over 50% Spent over $40 million to buy Qumu’s paltry revenue stream.
They are now projecting next quarter to be $20-$22 million of revenue and only lose $.02-$.10 per share. Guidance for 2012 is low double digit sales growth and the same level cash flow.
Teetering on selling here despite the yield.
Down 51%, HOLD

Lexmark International (NYSE-LXK)-Recommended 5/24/2011)
Buy Price-$28.80
Valuation $70.28 (Was $62.59, $63.94, $63.84, $79.12, $63.99)
Closed down $1.06 at $19.45
We have also collected $.80 a share in dividends here.
LXK now pays a $1.20 annual dividend.
Earnings announced in July. Revenue fell 12% and Non-GAAP earnings fell to $.89 a share from $1.36 a year earlier. Currency and Europe were blamed for the shortfall. Q3 guidance is another 10% revenue decline and Non-GAAP earnings of $.75-$.85 compared to $.95 last year. Our valuation actually increased on a gross margin increase to $70.28 and net cash fell a bit to $3.85 a share as they bought back 800,000 shares for $25 million and paid their quarterly dividend. This is why we don’t like Wall Street analysts. They would rather pay 100 times earnings for some maybe good company than a proven cash machine like LXK. Yield is now 6.2%
They reiterated their intent to return over 50% of their free cash flow to shareholders in dividends and share repurchases. The vagaries of the stock analysts make us cautious but we are back down well below our original buy price so we are making this a Buy again.
Down 33%, BUY

MER Telemanagement (NASDAQ-MTSL)-Recommended 5/17/2011)
Buy Price-$1.42 (Was $1.50 before adding another $10,000 investment)
Valuation $6.58 (Was $5.77, $5.55, $6.28 $5.61, $5.11)
Closed up $.65 at $2.25
Sold at $3.65 for a 157% gain.

Harris Interactive (NASDAQ-HPOL)-Recommended 3/3/2010)
Buy Price-$.92
Valuation $2.65 (Was $3.15, $3.05, $2.90, $3.11, $2.63, $2.97)
Closed at $1.22, down $.05
Earnings announced in August. Sales dropped from $44.2 million last year to $35.5 million as they continued to cull out low margin business. Net loss was $.02 a share down from $.09 last year. EBITDA for the quarter was $1.5 million compared to an EBITDA loss of $2.1 million last year. The “turnaround” continues. Net cash was $1.0 a share and our valuation was $2.65 a share compared to $2.63 last year.
Up 33%, HOLD

Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)
Buy Price-$5.08
Valuation $15.85 (was $14.13, $11.38, $14.04, $18.54, $15.99)
Closed up $.08 at $4.46
Pays $.24 annual dividend.
We have collected $.06 in dividends so far.
Next earnings due out Tuesday, August 28th after the market close.
Singer/Miller bought another 33,000 shares in early July at $3.88. They now own 12.1% of CCUR.
CCUR took on two of the Singer/Miller Board nominees and entered into a standstill agreement until the 2012 Shareholders meeting.
CCUR announced the initiation of a quarterly dividend of $.06 or $.24 annually in July.
Another 13D filed in June by what looks like another disgruntled shareholder (Stephen D. Baksa). Owns 435,000 shares or 5%.
13D/A filed in June disclosing another 100,000 shares purchased on June 13th by the Singer/Miller group for $3.75. Their combined ownership is now 11.7%.
Singer is also involved in MRV and was involved with Evolving Systems (which we owned personally even though we didn’t recommend it—it was a huge winner).
Earnings announced in May. Not bad. Revenues were down $2 million to $16.3 million but they made $.04 per share. Cash fell to $2.61 per share as receivables rose. Our valuation rose to $15.85, the second quarter of rising valuation and just about back to when we recommended it. Now the price just needs to reflect the improvement.
Down 12%, HOLD

Astex Pharmaceuticals Inc. (Was SuperGen Inc.) (NASDAQ-ASTX)-Recommended 10/4/2010)
Buy Price-$2.31 (was $2.09 before adding $10,000)
Valuation $3.16 (was $3.44, $3.42, $3.22, $3.11, $5.21, $4.89, $4.37, $3.48)
Closed up $.23 at $2.67
Earnings announced in August. Revenues were up to $19.9 million from $11.7 million and they made $.01 per share the same as last year. Cash was $121 million or $1.18 per share. They raised their earnings guidance to a loss of only $5 million from $15 million. All in all a good report. Our valuation fell however to $3.16 as revenues, cash and earnings were all a bit lower than last quarter.
So we have a company losing maybe $5 million in cash a year, or 25 years of cash, about $80 million in revenues and a huge drug pipeline. Any good news on the clinical trials front ought to set this stock on fire.
It is not easy to find a small drug company with substantial revenues, that has a pile of cash, is not losing a ton of money and is trading at even close to our valuation.
There are $2 BILLION of potential milestone payments down the road.
Up 16%, HOLD

Extreme Networks (EXTR-Recommended 3/22/2010)
Buy Price-$3.18 (Was $3.04 before adding another $10,000)
Valuation-$7.46 (was $6.31, $7.01, $6.72, $6.45, $5.67, $7.36, $7.23, $7.31, $6.82, $6.81)
Closed at $3.37 down $.02.
Earnings announced in August. We liked the quarter. Revenues were $87.6 million and they made $.08 a share profit compared to $.02 loss last year. Cash per share rose to $1.61. Our valuation rose to $7.46 compared to the same quarter of last years $6.45 as gross margin rose to 56% compared to 46% last year.
They are projecting next quarter at sales of $75-$82 million and EPS of $.00 to $.03.
Starboard owns 9.7%, Soros 8.8% and Blackrock owns 5.5% of EXTR.
Up 5%, BUY

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Buy Price- $1.45 per ADS (Was $1.68 before double up)
Valuation $5.52-(Was $5.00, $5.39, $5.33, $5.61, $5.73, $4.38, $4.44, $5.15)
Closed up $.08 at $1.68
Next earnings due out August 28th.
Now trading at below cash value again.
Q1 earnings announced in May. Nice. Revenues were $14.4 million and they made $1 million or $.04 per ADS. Cash was $48 million or $1.74 per share. No update on how Ragnarok 2 was doing or rumored Face Book games. Short term holders were disappointed as the stock fell. We are thrilled that cash and revenues went up from last quarter and our valuation rose to $5.52.
Ragnarok was commercially released in Korea on March 26th.
Up 16%, BUY

AEterna Zentaris (AEZS-Recommended 6/20/2009)
Buy price $1.42 (was $1.78 before adding another $10,000, $1.82 before double up)
Valuation –Speculation.
Closed at $.51 up $.07
“Earning” out in August. Revenues were $7.5 million versus $6.5 million last year and they lost $7.6 million from operations versus $8 million last year.
Cash stood at $40 million and they continue to sell more stock. They sold another 2.6 million this quarter for $1.9 million. A reverse stock split is coming, pending shareholder approval
Speculative for sure.
Down 64%, HOLD

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $5.68 (was $8.90, $9.40 before adding $10,000, and was $10.65 before double up),
Valuation –$16.00 (was $14, $12, $10)
Closed down $.25 at $12.23
Earnings announced in July. Well it appears they did not screw anything up and the stock rebounded to hit a new high of $12.14. Sales were up 9% YOY and they made $.02 a share (same as last year). They did raise annual guidance to 8-10% revenue growth versus 5-7% previously. The stock seems like it wants to go higher.
A Board member bought 6,000 shares on May 25th, at just over $9.90. Good show of support at this level.
This company needs to be sold so that someone can take advantage of their 70%+ gross margins and enjoy some profits.
Up 116%, HOLD

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up)
Valuation $19.24 (was $18.15, $17.96, $18.34, $16.07, $15.04, $14.23, $15.02, $14.35, $12.13, $12.57, $12.29, $11.90, $11.30, $11.48, $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Closed up $.23 at $14.47
MEDW announced another acquisition of a blood management consulting company in August. No financial details (as usual).
Earnings announced in May. Another good report. Revenues increased 22% and they made $.22 per share compared to $.17 last year. Cash is closing in on $4.50 a share ($4.42). Our valuation rose to $19.24.
All we read is that medical records will be a hot area, so MEDW looks like the place to be.
Up 129%, HOLD

Inuvo (INUV (was-VTRO, MIVA)-Recommended 10/21/2007)
Buy Price $8.15 (Was $11.90 before adding another $20,000, $13.10 before another $10,000 and was $15.00 before double up),
Valuation $3.11 (was $1.84, $8.04, $10.91, $12.42, $14.23, $14.76, $12.40, $12.55, $10.85, $8.25, $9.45, $28.05, $32.10, $34.20, $37.90, $37.95)
Closed at $.45 down $.01
Earnings announced in August. Mediocre. Revenues were $12.9 million and they lost $3 million. This loss included some heavy non-cash charges related to the merger so adjusted EBITDA was $200,000. Our valuation was $3.11 compared to our estimate of $3.59.
Down 92% HOLD

Medical Graphics Corporation (Was ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $11.95 (was $13.36 $15.90, $13.13, $13.19, $13.60, $15.00, $13.06, $12.15, $11.29, $11.73, $11.47, $11.16, $9.53, $13.30, $13.03)
Closed up $.01 at $5.50
We are now Medical Graphics with a new trading symbol—MGCD for now.
Earnings announced in June. Hmmm. Sales were down from $6.8 million last year to $6.3 million. They lost $.4 million versus $.1 million last year. Not great, but they blamed it on a few large customers pushing out some orders into the current quarter. We’ll see soon, cause then this quarter should be a barn burner. Our valuation slipped to $11.95 ($13.19 last year). Cash was $2.45 per share versus $2.42 last quarter. They also disclosed that they had entered into a Letter of Intent (LOI) to sell their New Leaf business.
If this company could just show a bit of growth I think we would see $10 in short order—if.
Blueline Partners still owns 7.6% of ANGN and ought to be pushing on the company to do something about the stock price.
While MGCD is still trading at less than ½ our valuation, we are switching to a HOLD until we gets some results or news that improves the prospects here.
Up 44%, HOLD

OB-abies (Bulletin Board Listed Stocks)

As proven by OPTIO, patience is necessary with these stocks.

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up),
Valuation $6.13 (was $5.82, $5.81, $5.72, $5.65, $5.39, $4.86, $5.60, $5.73, $5.54, $5.74, $5.96, $4.72, $5.19, $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.05 up $.05.
ARI announced an acquisition last week. They acquired the assets of Ready2Ride Inc., of Floyds Knobs, Ind., the first-to-market and leading provider of enhanced aftermarket fitment data for the powersports industry. Terms of the transaction were not disclosed.
Earnings announced in June. Not bad. Sales were up 7% to $5.7 million and they made $.03 a share down from $.07 last year as they spent more on technology infrastructure, investor relations and product development.
Our valuation moved up to $6.13—the highest ever since we have been following the stock. No one cared as the stock didn’t trade after the earnings announcement. Looks like they need to even spend more on investor relations and PR.
Now down 35%, BUY, Still a Huge valuation gap here.

Rand Worldwide (RWWI.ob (Was Avatech, AVSO.ob)-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $2.55 (was $2.08, $2.09, $2.12, $2.60, $2.40, $1.90, $2.26 $3.07, $3.03, $2.38, $2.57, $2.81, $2.78, $3.30, $3.76, $4.00 $3.41, $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.80, up $.05
RWWI announced an acquisition in August. No financial details. The acquisition was in computational fluid dynamics (CFD) analysis consulting and thermal simulation services that provide design insight allowing customers to make better informed design decisions without distractions to their current development processes.
Earnings announced in May. Not bad. While sales were down to $22 million from $27 million last year (last year included a one big order), they made $.03 a share compared to $.04 last year. Margins increased to just over 50% from 47% last quarter. Our new valuation is $2.55 a share, down $.05 from last year.
Peter Kamin the new Chairman of the Board filed a 13d in March disclosing an 11% ownership state. Interesting as one would file a 13G if their intention was to just be a passive investor. Maybe as Chairman he will do SOMETHING to get the share price up.
RWWI announced an acquisition in March, but gave no financial details. “If a tree falls in the forest but there is no one around to hear it, dies it make a sound”? Seems like the company is making no effort to get this company known to the investment community. We have been in this one a LONG time and are getting impatient.
Market cap of $40 million for a $90 million in sales company with 50% margins and not losing money, just too cheap.
Our valuation is 3X the current price.
Up 1%, HOLD

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.34 (Was $1.34, $1.37, $1.36, $1.23, $.91, $1.21, $.71, $.83, $.88 $.96, $.93, $.75, $.85, $1.57, $1.40, $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price $.20 closed at $.20.
Earnings announced in August. Another good quarter and no one cares. Revenues were up 11% to $4.5 million and they made $.3 million or $.01 per share. Cash per share was $.11 and our valuation stayed at $1.34.
CTIG announced a product deal with Mitel in June. Any PR is good news here.
A Director purchased 30,000 shares on May 23rd at $.25 a share. Not a lot of money but a good sign that things are going well.
Four profitable quarters in a row.
At a $7 million market cap, this is stupidly cheap. Their intellectual property is probably worth 3 times this price. They need to liquefy this value somehow.
Still an “undercover” company and stock.
Down 26%. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $1.68 (Was $1.80 before $10,000 adder, $2.16 before double-up)
Valuation-$.85 (Was $1.05, $2.43, $4.11, $4.84, $4.98, $4.60, $3.82, $4.00, $3.68, $3.12, $3.98, $4.44, $3.22, $2.12, $4.56, $4.16)
Closed at $.04, unchanged.
Now LTUS announced in April that they have no money for audits and SEC filings. Hammered down to less than a nickel a share. Can you spare them some money? Not worth selling at this point until we need tax losses. Maybe something good will happen. What a disaster. No more Chinese stocks for us, no matter how compelling the valuation.
Down 98%, HOLD

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Buy BLIN @ $1.24

Bridgeline Digital Inc. (NASDAQ- BLIN)

Valuation-$2.24
Price August 20, 2012-$1.24

.We have been watching BLIN for a long time—2009. It has always traded at a large discount to our valuation but we think that will change over the next year.

Their last quarter (6/30/2012) sales were down 1% from the prior year to about $6.4 million as they transition their business to iAPPs which grew 35% to 4.2 million, gross margins were 56% and they lost $.02 per share ($.3 million) the same as last year. They broke even on a Non-GAAP basis. Their net cash position is negative $3 million or $.24 per share which is reflected in our valuation.

From their latest press release (August 14th):

“On June 5, 2012 we announced our strategic alliance with UPS Logistics to offer B2B and B2C eCommerce web stores with an end-to-end offering comprised of our iAPPS eCommerce solution and UPS logistics and fulfillment services.

We also completed the acquisition of MarketNet, Inc., an award-winning interactive technology company based in Texas, expanding our North American presence into the South Central U.S. market.

Earlier today we announced iAPPS ds (distributed subscription). iAPPS ds has been specifically developed for large franchise networks and multiple dealer organizations to improve the website tools they extend to franchisees and local dealers to effectively attract, communicate with and retain local customers while enabling superior oversight of corporate branding and content messaging. Franchisees and local dealers would be required to pay a monthly subscription fee for the service.

Bridgeline Digital is pleased to announce that it recently signed a multi-year iAPPS ds agreement with a nationally recognized franchise, which plans to have up to 4,000 of its franchises directly license iAPPS ds. Bridgeline Digital expects to announce more details about this specific customer in fiscal 2013.”

Two of BLIN’s management own just under 10% of BLIN’s shares.

They are projecting $26.5 million in sales this year and to be Non-GAAP profitable. With a market cap of about $20 million and 56% margins, we think this is a BUY even though the discount to our valuation is only 45%.

Average trading volume is about 96,000 shares a day. There are about 15 million shares outstanding. The stock has traveled between $.47 and $3.24 over the last 12 months.

About Bridgeline Digital

Bridgeline Digital is developer of the award-winning iAPPS(R) Web Engagement Platform and related interactive solutions.
The iAPPS platform deeply integrates Web Content Management, eCommerce, eMarketing, and web Analytics capabilities within the heart of mission critical websites or eCommerce web stores. iAPPS enables customers to enhance and optimize the value of their web properties. Combined with award-winning interactive development capabilities, Bridgeline helps customers cost-effectively accommodate the changing needs of today’s rapidly evolving web properties; allowing them to maximize revenue, improve customer loyalty, enhance employee knowledge, and reduce operational costs.
The iAPPS product suite is delivered through a Cloud-based SaaS business model, whose flexible architecture provides customers with state-of-the-art deployments that provide maintenance and daily technical operation and support; or via a traditional perpetual licensing business model, in which the iAPPS software resides on a dedicated server in either the customer’s facility or Bridgeline’s co-managed hosting facility.
Bridgeline Digital is headquartered near Boston with additional locations in Atlanta, Baltimore, Chicago, Denver, New York, Philadelphia, Tampa, and Bangalore, India. Bridgeline has hundreds of customers ranging from middle market organizations to divisions within Fortune 1,000 companies that include: L’Oreal, Sun Chemical, Parametric Technologies Corp, Blue Cross Blue Shield, Novartis, Shaw Flooring, Endo Pharmaceuticals, Guardian Life, Tosoh, Dover, ViaWest, PODS, AARP, Cadaret Grant & Co., CFO Magazine, and the American Academy of Pediatrics.wireless apps as a fundamental part of their daily lives. Government agencies utilize TCS’ cyber security expertise, professional services, and highly secure deployable satellite solutions for mission-critical communications..

Cheap Stocks, 8/17/2012 Update

We were up 2.4% last week. MTSL had great earnings last week and was up 41%. We are now up 12.9% for the year.

Some of our stocks are just stupid cheap—compared to their net cash on hand per share divided by their stock price.

Check this list:
RIMG 89%
EXTR 48%
GRVY 109%
CCUR 61%
MTSL 45%
SIGM 62%
ASTX 48%
CTIG 54%
MRVC 36%
ANGN 45%
AVNT 65%

Plus, EXTR, RIMG, ANGN and SIGM are all in “play” with activist shareholders either trying to get them to pay out special dividends or take them over, or they are pursuing “strategic alternatives”.

The DOW was up .5% last week, NASDAQ was up 1.8% and the Russell 3000 was up 1%.

CTIG, MTSL, AVNW, AEZS and HPOL earnings last week.

AVNW, CBEY, MTSL, GRVY, and MITL are our favorites.

For the year, the DOW is up 8.7%, NASDAQ is up 18.1%, and the Russell 3000 is up 12.5%

Last week we went 13 stocks up, 9 down and 1 unchanged. Since inception we are now 56 stocks up and 18 down for a 75.7% winning percentage (80% is our target win %).

Since our beginning, we have closed out the following positions:
2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
2008-BDAY -39% (long overdue takeover offer-or “take-under”)
2008-DTLK +40% (third trip on this one)
2008-ILOG +26% (Buy-out offer from IBM)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33%
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL +78%
2010-CCEL +49%
2010-HPOL +27%
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%
2011-PRM +56% Buyout (1 week after we recommended it)
2011-RST +12%
2011-NINE -10%
2012-BVSN +30%
2012-TISA +137%
2012-PTIX -44%

The model portfolio assumes $10,000 invested in each stock (unless we double-up–then it is $20,000), less $10 commission each way (TD Ameritrade rate).
For the 50 stocks that we closed out since 2006 (45 were winners) the average net gain was 38%.

Telecommunications Systems Inc. (NASDAQ-AVNW)-Recommended 6/14/2012)
Buy Price- $1.37
Valuation $6.72 (Was $5.49)
Closed down $.04 at $1.48
Earnings announced in July. They were fine. Revenues were up 14% to $114 million and cutting through all the goodwill write-off it looks like they made $1.5 million on an operating basis. Our valuation rose to $6.72. After falling to around $1.15 the stock popped back up to close at $1.36 when it became apparent the sky was not falling.
TSYS announced an acquisition on in July. They are buying the leader in 911 communications for $37 million.
Up 8%, BUY

Aviat Networks Inc. (NASDAQ-AVNW)-Recommended 2/27/2012)
Buy Price- $2.62
NEW Valuation $9.37 (Was $8.85, $8.31)
Closed up $.24 at $2.50
Earnings announced last week. Revenues were down $5 million to $116 million, and they made $1.2 million on a Non-GAAP basis versus $2.8 million last year. Our valuation rose to $9.37 per share. Needham reiterated its “Buy” on AVNW.
Cash per share rose to $1.62.
Down 5%, BUY

CBeyond Inc. (NASDAQ-CBEY)-Recommended 2/28/2012)
Buy Price $7.17 ( Was $7.94 before another $10,000 added at $6.53)
Valuation $29.59 (Was $29.58, $29.21)
Closed up $.70 at $8.55
Earnings out in August. They were good. Revenues were up 3%. They made a profit of $1.5 million ($.05 per share) compared to a loss of $1.8 million last year. Cash flow was positive and our valuation rose $.01 to $29.59 per share.
Up 19%, BUY

MRV Communications (Pink Sheets-MRVC.pk)
Valuation $1.73 (Was $1.73, $2.06, $2.16 (after $.475 and $.30 special dividends), $2.62, $2.79)
Buy Price October 7, 2011- $.50 ($1.27 before special dividends)
Closed at $.51 down $.07
Earnings announced in August. Revenues were $55 million down from $59 million last year. They lost $2 million ($.01 per share) after a net $1 million loss on litigation settlement and goodwill write-off. Our valuation stayed at $1.73, $.30 higher than our estimate for this quarter. The big news is that they are selling 2 more European companies for what looks like a combined $24 million and going forward with their optical communications group which is the bulk of their revenues. Our pro-forma valuation, assuming both of these sales close is $1.61 with $.44 a share in cash (76% of the current market cap). Still trading at less than ½ our valuation.
Raging Capital continues to buy shares. They now own over 27 million shares or 17.6% of MRV.
Up 1% BUY

Sigma Designs Inc. (NASDAQ-SIGM)-Recommended 7/11/2011)
Buy Price-$8.49
Valuation $10.67 (Was $8.41 $12.10, $13.40, $16.02)
Closed up $.24 at $7.01
Sigma and Potomac settled their war, at least temporarily as Potomac will get two Board seats.
Earnings announced in May. Still losing money but sales were up to $40 million from $36 million last quarter. They lost $8.5 million on a non-GAAP basis versus $14 million last quarter. Net cash per share fell a bit to $4.32. Over all our valuation increased about 25% to $10.67. Not bad, but not good enough to buy any more here.
They are projecting sales for next quarter (Q2) to be between $61-$67 million with 45% GAAP margins. Operating breakeven is expected in Q4 including the Trident acquisition which is expected to contribute about $24 million of sales per quarter.
So we are trading at a market cap of about $70 million (excluding cash) for a $$200 million a year chip company with 50% margins. Still pretty stupid we think. We plan to hold on for another couple of quarters to see if they can turn this around.
Down 17%, HOLD

Mitel Networks (NASDAQ-MITL)-Recommended 7/6/2011)
Buy Price- $3.04( Was $3.36 before $10,000 added, $3.95 before $10,000 added)
Valuation $13.92 (Was $12.81, $15.28, $14.04, $10.39)
Closed down $.46 at $2.50
Ugg. In August, MITL warned that revenues would be below their guidance at about $138-$139 million compared to $150-$155 million due to delayed customer implementations and the “a general deterioration of the macro environment”. Not sure what the latter part means. No earning guidance update was given. An update will be given when earnings are released on Thursday, August 30th after the market closes. They also announced that they would cut about 10% of their workforce and close “excess” facilities. We will guess that when the numbers are out, our valuation will still me at least 3X the current trading price.
Down 5%, HOLD

Rimage (NASDAQ-RIMG)-Recommended 5/24/2011)
Buy Price-$14.20
Valuation $$14.03 (Was $19.81, $22.23, $25.63, $26.45)
Closed up $.13 at $6.92
Pays $.68 a share annual dividend.
We have collected $.81 of dividends since we recommended RIMG.
Earnings announced in July. Well not really earnings. Revenues fell 9% to $18.3 million, margins fell to 45% from 49% last year and they lost $2.75 million or $.27 per share. Qumu revenues were a whopping $1.4 million. Cash fell to $62.3 million or $6.13 and our valuation fell again to $14.03
This is the worst case of management squandering its assets on an acquisition to escape being bought out and fired. We have lost over $12 on our valuation and the stock is down over 50% Spent over $40 million to buy Qumu’s paltry revenue stream.
They are now projecting next quarter to be $20-$22 million of revenue and only lose $.02-$.10 per share. Guidance for 2012 is low double digit sales growth and the same level cash flow.
Teetering on selling here despite the yield.
Down 50%, HOLD

Lexmark International (NYSE-LXK)-Recommended 5/24/2011)
Buy Price-$28.80
Valuation $70.28 (Was $62.59, $63.94, $63.84, $79.12, $63.99)
Closed up $.61 at $20.51
We have also collected $.80 a share in dividends here.
LXK now pays a $1.20 annual dividend.
Earnings announced in July. Revenue fell 12% and Non-GAAP earnings fell to $.89 a share from $1.36 a year earlier. Currency and Europe were blamed for the shortfall. Q3 guidance is another 10% revenue decline and Non-GAAP earnings of $.75-$.85 compared to $.95 last year. Our valuation actually increased on a gross margin increase to $70.28 and net cash fell a bit to $3.85 a share as they bought back 800,000 shares for $25 million and paid their quarterly dividend. This is why we don’t like Wall Street analysts. They would rather pay 100 times earnings for some maybe good company than a proven cash machine like LXK. Yield is now 6.5%
They reiterated their intent to return over 50% of their free cash flow to shareholders in dividends and share repurchases. The vagaries of the stock analysts make us cautious but we are back down well below our original buy price so we are making this a Buy again.
Down 29%, BUY

MER Telemanagement (NASDAQ-MTSL)-Recommended 5/17/2011)
Buy Price-$1.42 (Was $1.50 before adding another $10,000 investment)
NEW Valuation $6.58 (Was $5.77, $5.55, $6.28 $5.61, $5.11)
Closed up $.65 at $2.25
Earnings announced last week. Revenues were up 10% to $3.3 million and they made $.10 a share. For the six months ended June 30, they have earned $.17 per share (untaxed). Our valuation jumped to $6.58 per share and they have $1.02 per share in net cash.
Up 58% HOLD

Harris Interactive (NASDAQ-HPOL)-Recommended 3/3/2010)
Buy Price-$.92
NEW Valuation $2.65 (Was $3.15, $3.05, $2.90, $3.11, $2.63, $2.97)
Closed at $1.27, up $.18
Earnings announced last week. Sales dropped from $44.2 million last year to $35.5 million as they continued to cull out low margin business. Net loss was $.02 a share down from $.09 last year. EBITDA for the quarter was $1.5 million compared to an EBITDA loss of $2.1 million last year. The “turnaround” continues. Net cash was $1.0 a share and our valuation was $2.65 a share compared to $2.63 last year.
Up 38%, HOLD

Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)
Buy Price-$5.08
Valuation $15.85 (was $14.13, $11.38, $14.04, $18.54, $15.99)
Closed down $.10 at $4.38
Pays $.24 annual dividend.
We have collected $.06 in dividends so far.
Singer/Miller bought another 33,000 shares in early July at $3.88. They now own 12.1% of CCUR.
CCUR took on two of the Singer/Miller Board nominees and entered into a standstill agreement until the 2012 Shareholders meeting.
CCUR announced the initiation of a quarterly dividend of $.06 or $.24 annually in July.
Another 13D filed in June by what looks like another disgruntled shareholder (Stephen D. Baksa). Owns 435,000 shares or 5%.
13D/A filed in June disclosing another 100,000 shares purchased on June 13th by the Singer/Miller group for $3.75. Their combined ownership is now 11.7%.
Singer is also involved in MRV and was involved with Evolving Systems (which we owned personally even though we didn’t recommend it—it was a huge winner).
Earnings announced in May. Not bad. Revenues were down $2 million to $16.3 million but they made $.04 per share. Cash fell to $2.61 per share as receivables rose. Our valuation rose to $15.85, the second quarter of rising valuation and just about back to when we recommended it. Now the price just needs to reflect the improvement.
Down 14%, HOLD

Astex Pharmaceuticals Inc. (Was SuperGen Inc.) (NASDAQ-ASTX)-Recommended 10/4/2010)
Buy Price-$2.31 (was $2.09 before adding $10,000)
Valuation $3.16 (was $3.44, $3.42, $3.22, $3.11, $5.21, $4.89, $4.37, $3.48)
Closed up $.02 at $2.44
Earnings announced in August. Revenues were up to $19.9 million from $11.7 million and they made $.01 per share the same as last year. Cash was $121 million or $1.18 per share. They raised their earnings guidance to a loss of only $5 million from $15 million. All in all a good report. Our valuation fell however to $3.16 as revenues, cash and earnings were all a bit lower than last quarter.
So we have a company losing maybe $5 million in cash a year, or 25 years of cash, about $80 million in revenues and a huge drug pipeline. Any good news on the clinical trials front ought to set this stock on fire.
It is not easy to find a small drug company with substantial revenues, that has a pile of cash, is not losing a ton of money and is trading at even close to our valuation.
There are $2 BILLION of potential milestone payments down the road.
Up 6%, HOLD

Extreme Networks (EXTR-Recommended 3/22/2010)
Buy Price-$3.18 (Was $3.04 before adding another $10,000)
Valuation-$7.46 (was $6.31, $7.01, $6.72, $6.45, $5.67, $7.36, $7.23, $7.31, $6.82, $6.81)
Closed at $3.37 up $.14.
Earnings announced in August. We liked the quarter. Revenues were $87.6 million and they made $.08 a share profit compared to $.02 loss last year. Cash per share rose to $1.61. Our valuation rose to $7.46 compared to the same quarter of last years $6.45 as gross margin rose to 56% compared to 46% last year.
They are projecting next quarter at sales of $75-$82 million and EPS of $.00 to $.03.
Starboard owns 9.7%, Soros 8.8% and Blackrock owns 5.5% of EXTR.
Up 6%, BUY

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Buy Price- $1.45 per ADS (Was $1.68 before double up)
Valuation $5.52-(Was $5.00, $5.39, $5.33, $5.61, $5.73, $4.38, $4.44, $5.15)
Closed down $.04 at $1.60
Now trading at below cash value again.
Q1 earnings announced in May. Nice. Revenues were $14.4 million and they made $1 million or $.04 per ADS. Cash was $48 million or $1.74 per share. No update on how Ragnarok 2 was doing or rumored Face Book games. Short term holders were disappointed as the stock fell. We are thrilled that cash and revenues went up from last quarter and our valuation rose to $5.52.
Ragnarok was commercially released in Korea on March 26th.
Up 10%, BUY

AEterna Zentaris (AEZS-Recommended 6/20/2009)
Buy price $1.42 (was $1.78 before adding another $10,000, $1.82 before double up)
Valuation –Speculation.
Closed at $.44 up $.01
“Earning” out last week. Revenues were $7.5 million versus $6.5 million last year and they lost $7.6 million from operations versus $8 million last year.
Cash stood at $40 million and they continue to sell more stock. They sold another 2.6 million this quarter for $1.9 million. A reverse stock split is coming, pending shareholder approval
Speculative for sure.
Down 69%, HOLD

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $5.68 (was $8.90, $9.40 before adding $10,000, and was $10.65 before double up),
Valuation –$16.00 (was $14, $12, $10)
Closed up $.49 at $12.48
 Earnings announced in July. Well it appears they did not screw anything up and the stock rebounded to hit a new high of $12.14. Sales were up 9% YOY and they made $.02 a share (same as last year). They did raise annual guidance to 8-10% revenue growth versus 5-7% previously. The stock seems like it wants to go higher.
A Board member bought 6,000 shares on May 25th, at just over $9.90. Good show of support at this level.
This company needs to be sold so that someone can take advantage of their 70%+ gross margins and enjoy some profits.
Up 120%, HOLD

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up)
Valuation $19.24 (was $18.15, $17.96, $18.34, $16.07, $15.04, $14.23, $15.02, $14.35, $12.13, $12.57, $12.29, $11.90, $11.30, $11.48, $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Closed up $.22 at $14.24
MEDW announced another acquisition of a blood management consulting company in August. No financial details (as usual).
Earnings announced in May. Another good report. Revenues increased 22% and they made $.22 per share compared to $.17 last year. Cash is closing in on $4.50 a share ($4.42). Our valuation rose to $19.24.
All we read is that medical records will be a hot area, so MEDW looks like the place to be.
Up 125%, HOLD

Inuvo (INUV (was-VTRO, MIVA)-Recommended 10/21/2007)
Buy Price $8.15 (Was $11.90 before adding another $20,000, $13.10 before another $10,000 and was $15.00 before double up),
Valuation $3.11 (was $1.84, $8.04, $10.91, $12.42, $14.23, $14.76, $12.40, $12.55, $10.85, $8.25, $9.45, $28.05, $32.10, $34.20, $37.90, $37.95)
Closed at $.46 down $.08
Earnings announced in August. Mediocre. Revenues were $12.9 million and they lost $3 million. This loss included some heavy non-cash charges related to the merger so adjusted EBITDA was $200,000. Our valuation was $3.11 compared to our estimate of $3.59.
Down 91% HOLD

Angeion Corporation (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $11.95 (was $13.36 $15.90, $13.13, $13.19, $13.60, $15.00, $13.06, $12.15, $11.29, $11.73, $11.47, $11.16, $9.53, $13.30, $13.03)
Closed down $.02 at $5.49
Earnings announced in June. Hmmm. Sales were down from $6.8 million last year to $6.3 million. They lost $.4 million versus $.1 million last year. Not great, but they blamed it on a few large customers pushing out some orders into the current quarter. We’ll see soon, cause then this quarter should be a barn burner. Our valuation slipped to $11.95 ($13.19 last year). Cash was $2.45 per share versus $2.42 last quarter. They also disclosed that they had entered into a Letter of Intent (LOI) to sell their New Leaf business and were going to change their name to MGC Diagnostics Corporation. Well at least that sounds like a medical company.
If this company could just show a bit of growth I think we would see $10 in short order—if.
Blueline Partners still owns 7.6% of ANGN and ought to be pushing on the company to do something about the stock price.
While ANGN is still trading at less than ½ our valuation, we are switching to a HOLD until we gets some results or news that improves the prospects here.
Up 44%, HOLD

OB-abies (Bulletin Board Listed Stocks)

As proven by OPTIO, patience is necessary with these stocks.

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up),
Valuation $6.13 (was $5.82, $5.81, $5.72, $5.65, $5.39, $4.86, $5.60, $5.73, $5.54, $5.74, $5.96, $4.72, $5.19, $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.00 up $.05.
Earnings announced in June. Not bad. Sales were up 7% to $5.7 million and they made $.03 a share down from $.07 last year as they spent more on technology infrastructure, investor relations and product development.
Our valuation moved up to $6.13—the highest ever since we have been following the stock. No one cared as the stock didn’t trade after the earnings announcement. Looks like they need to even spend more on investor relations and PR.
Now down 38%, BUY, Still a Huge valuation gap here.

Rand Worldwide (RWWI.ob (Was Avatech, AVSO.ob)-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $2.55 (was $2.08, $2.09, $2.12, $2.60, $2.40, $1.90, $2.26 $3.07, $3.03, $2.38, $2.57, $2.81, $2.78, $3.30, $3.76, $4.00 $3.41, $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.80, unchanged
RWWI announced an acquisition in August. No financial details. The acquisition was in computational fluid dynamics (CFD) analysis consulting and thermal simulation services that provide design insight allowing customers to make better informed design decisions without distractions to their current development processes.
Earnings announced in May. Not bad. While sales were down to $22 million from $27 million last year (last year included a one big order), they made $.03 a share compared to $.04 last year. Margins increased to just over 50% from 47% last quarter. Our new valuation is $2.55 a share, down $.05 from last year.
Peter Kamin the new Chairman of the Board filed a 13d in March disclosing an 11% ownership state. Interesting as one would file a 13G if their intention was to just be a passive investor. Maybe as Chairman he will do SOMETHING to get the share price up.
RWWI announced an acquisition in March, but gave no financial details. “If a tree falls in the forest but there is no one around to hear it, dies it make a sound”? Seems like the company is making no effort to get this company known to the investment community. We have been in this one a LONG time and are getting impatient.
Market cap of $40 million for a $90 million in sales company with 50% margins and not losing money, just too cheap.
Our valuation is 3X the current price.
Down 6%, HOLD

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
NEW Valuation $1.34 (Was $1.34, $1.37, $1.36, $1.23, $.91, $1.21, $.71, $.83, $.88 $.96, $.93, $.75, $.85, $1.57, $1.40, $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price $.20 closed at $.20.
Earnings announced last week. Another good quarter and no one cares. Revenues were up 11% to $4.5 million and they made $.3 million or $.01 per share. Cash per share was $.11 and our valuation stayed at $1.34.
CTIG announced a product deal with Mitel in June. Any PR is good news here.
A Director purchased 30,000 shares on May 23rd at $.25 a share. Not a lot of money but a good sign that things are going well.
Four profitable quarters in a row.
At a $7 million market cap, this is stupidly cheap. Their intellectual property is probably worth 3 times this price. They need to liquefy this value somehow.
Still an “undercover” company and stock.
Down 26%. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $1.68 (Was $1.80 before $10,000 adder, $2.16 before double-up)
Valuation-$.85 (Was $1.05, $2.43, $4.11, $4.84, $4.98, $4.60, $3.82, $4.00, $3.68, $3.12, $3.98, $4.44, $3.22, $2.12, $4.56, $4.16)
Closed at $.04, unchanged.
Now LTUS announced in April that they have no money for audits and SEC filings. Hammered down to less than a nickel a share. Can you spare them some money? Not worth selling at this point until we need tax losses. Maybe something good will happen. What a disaster. No more Chinese stocks for us, no matter how compelling the valuation.
Down 98%, HOLD

Cheap Stocks, 8/10/2012 Update

We were up .5% last week. MITL warned last week and ruined our chances of beating the market averages. We are now up 10.5% for the year.

Some of our stocks are just stupid cheap—compared to their net cash on hand per share divided by their stock price.

Check this list:
RIMG 90%
EXTR 50%
GRVY 106%
CCUR 60%
MTSL 50%
SIGM 64%
ASTX 49%
CTIG 55%
MRVC 33%
ANGN 44%
AVNT 68%

Plus, EXTR, RIMG, ANGN, and SIGM are all in “play” with activist shareholders either trying to get them to pay out special dividends or take them over, or they are pursuing “strategic alternatives”.

The DOW was up .9% last week, NASDAQ was up 1.8% and the Russell 3000 was up 1.2%.

MRVC and INUVO earnings last week.

AVNW, CBEY, MTSL andGRVY are our favorites.

For the year, the DOW is up 8.1%, NASDAQ is up 16%, and the Russell 3000 is up 11.3%

Last week we went 11 stocks up, 10 down and 2 unchanged. Since inception we are now 58 stocks up and 16 down for a 78.4% winning percentage (80% is our target win %).

Since our beginning, we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
2008-BDAY -39% (long overdue takeover offer-or “take-under”)
2008-DTLK +40% (third trip on this one)
2008-ILOG +26% (Buy-out offer from IBM)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33%
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL +78%
2010-CCEL +49%
2010-HPOL +27%
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%
2011-PRM +56% Buyout (1 week after we recommended it)
2011-RST +12%
2011-NINE -10%
2012-BVSN +30%
2012-TISA +137%
2012-PTIX -44%

The model portfolio assumes $10,000 invested in each stock (unless we double-up–then it is $20,000), less $10 commission each way (TD Ameritrade rate).

For the 50 stocks that we closed out since 2006 (45 were winners) the average net gain was 38%.

Telecommunications Systems Inc. (NASDAQ-AVNW)-Recommended 6/14/2012)
Buy Price- $1.37
Valuation $6.72 (Was $5.49)
Closed up $.12 at $1.52
Earnings announced in July. They were fine. Revenues were up 14% to $114 million and cutting through all the goodwill write-off it looks like they made $1.5 million on an operating basis. Our valuation rose to $6.72. After falling to around $1.15 the stock popped back up to close at $1.36 when it became apparent the sky was not falling.
TSYS announced an acquisition on in July. They are buying the leader in 911 communications for $37 million.
Up 11%, BUY

Aviat Networks Inc. (NASDAQ-AVNW)-Recommended 2/27/2012)
Buy Price- $2.62
Valuation $8.85 (Was $8.31)
Closed up $.15 at $2.26
Earnings out in May. Revenues were down $4 million to $111.6 million, but they made $2.2 million on a Non-GAAP basis versus losing $.4 million last year.
Our valuation rose to $8.85 and cash per share rose to $1.53.
Down 14%, BUY

CBeyond Inc. (NASDAQ-CBEY)-Recommended 2/28/2012)
Buy Price $7.17 ( Was $7.94 before another $10,000 added at $6.53)
Valuation $29.59 (Was $29.58, $29.21)
Closed up $.75 at $8.01
Earnings out in August. They were good. Revenues were up 3%. They made a profit of $1.5 million ($.05 per share) compared to a loss of $1.8 million last year. Cash flow was positive and our valuation rose $.01 to $29.59 per share.
Up 12%, BUY

MRV Communications (Pink Sheets-MRVC.pk)
NEW Valuation $1.73 (Was $1.73, $2.06, $2.16 (after $.475 and $.30 special dividends), $2.62, $2.79)
Buy Price October 7, 2011- $.50 ($1.27 before special dividends)
Closed at $.58 up $.01
Earnings announced last week. Revenues were $55 million down from $59 million last year. They lost $2 million ($.01 per share) after a net $1 million loss on litigation settlement and goodwill write-off. Our valuation stayed at $1.73, $.30 higher than our estimate for this quarter. The big news is that they are selling 2 more European companies for what looks like a combined $24 million and going forward with their optical communications group which is the bulk of their revenues. Our pro-forma valuation, assuming both of these sales close is $1.61 with $.44 a share in cash (76% of the current market cap). Still trading at less than ½ our valuation.
Raging Capital continues to buy shares. They now own over 27 million shares or 17.6% of MRV.
Up 7% BUY

Sigma Designs Inc. (NASDAQ-SIGM)-Recommended 7/11/2011)
Buy Price-$8.49
Valuation $10.67 (Was $8.41 $12.10, $13.40, $16.02)
Closed down $.05 at $6.77
Sigma and Potomac settled their war, at least temporarily as Potomac will get two Board seats.
Earnings announced in May. Still losing money but sales were up to $40 million from $36 million last quarter. They lost $8.5 million on a non-GAAP basis versus $14 million last quarter. Net cash per share fell a bit to $4.32. Over all our valuation increased about 25% to $10.67. Not bad, but not good enough to buy any more here.
They are projecting sales for next quarter (Q2) to be between $61-$67 million with 45% GAAP margins. Operating breakeven is expected in Q4 including the Trident acquisition which is expected to contribute about $24 million of sales per quarter.
So we are trading at a market cap of about $70 million (excluding cash) for a $$200 million a year chip company with 50% margins. Still pretty stupid we think. We plan to hold on for another couple of quarters to see if they can turn this around.
Down 20%, HOLD

Mitel Networks (NASDAQ-MITL)-Recommended 7/6/2011)
Buy Price- $3.04( Was $3.36 before $10,000 added, $3.95 before $10,000 added)
Valuation $13.92 (Was $12.81, $15.28, $14.04, $10.39)
Closed down $1.05 at $3.36
Ugg. MITL warned that revenues would be below their guidance at about $138-$139 million compared to $150-$155 million due to delayed customer implementations and the “a general deterioration of the macro environment”. Not sure what the latter part means. No earning guidance update was given. An update will be given when earnings are released on Thursday, August 30th after the market closes. They also announced that they would cut about 10% of their workforce and close “excess” facilities. We will guess that when the numbers are out, our valuation will still me at least 3X the current trading price.
Up 11%, HOLD

Rimage (NASDAQ-RIMG)-Recommended 5/24/2011)
Buy Price-$14.20
Valuation $$14.03 (Was $19.81, $22.23, $25.63, $26.45)
Closed down $.06 at $6.79
Pays $.68 a share annual dividend.
We have collected $.54 of dividends since we recommended RIMG.
Earnings announced in July. Well not really earnings. Revenues fell 9% to $18.3 million, margins fell to 45% from 49% last year and they lost $2.75 million or $.27 per share. Qumu revenues were a whopping $1.4 million. Cash fell to $62.3 million or $6.13 and our valuation fell again to $14.03
This is the worst case of management squandering its assets on an acquisition to escape being bought out and fired. We have lost over $12 on our valuation and the stock is down over 50% Spent over $40 million to buy Qumu’s paltry revenue stream.
They are now projecting next quarter to be $20-$22 million of revenue and only lose $.02-$.10 per share. Guidance for 2012 is low double digit sales growth and the same level cash flow.
Teetering on selling here despite the yield.
Down 52%, HOLD

Lexmark International (NYSE-LXK)-Recommended 5/24/2011)
Buy Price-$28.80
Valuation $70.28 (Was $62.59, $63.94, $63.84, $79.12, $63.99)
Closed up $1.98 at $19.90
We have also collected $.80 a share in dividends here.
LXK now pays a $1.20 annual dividend.
Earnings announced in July. Revenue fell 12% and Non-GAAP earnings fell to $.89 a share from $1.36 a year earlier. Currency and Europe were blamed for the shortfall. Q3 guidance is another 10% revenue decline and Non-GAAP earnings of $.75-$.85 compared to $.95 last year. Our valuation actually increased on a gross margin increase to $70.28 and net cash fell a bit to $3.85 a share as they bought back 800,000 shares for $25 million and paid their quarterly dividend. This is why we don’t like Wall Street analysts. They would rather pay 100 times earnings for some maybe good company than a proven cash machine like LXK. Yield is now 6.5%
They reiterated their intent to return over 50% of their free cash flow to shareholders in dividends and share repurchases. The vagaries of the stock analysts make us cautious but we are back down well below our original buy price so we are making this a Buy again.
Down 31%, BUY

MER Telemanagement (NASDAQ-MTSL)-Recommended 5/17/2011)
Buy Price-$1.42 (Was $1.50 before adding another $10,000 investment)
Valuation $5.77 (Was $5.55, $6.28 $5.61, $5.11)
Closed down $.13 at $1.60
Earnings announced in May. Sales were up from $2.8 million to $3 million and they made $.07 per share versus $.03 last year. With $.80 a share in cash, this is trading at about 4X annualized earnings. Way too cheap. Our valuation rose to $5.77 per share.
Up 13% BUY

Harris Interactive (NASDAQ-HPOL)-Recommended 3/3/2010)
Buy Price-$.92
Valuation $3.15 (Was $3.05, $2.90, $3.11, $2.63, $2.97)
Closed at $1.09, down $.02
Next earnings due out Thursday, August 15th after the market close.
Earnings announced in May. Sales dropped $3 million from $37 million to $34 million. Their loss was slashed from $2.3 million to $.3 million. Not bad. Our valuation rose to $3.15 per share. If they can get some sales momentum over the next couple of quarters we could see $2 plus. If……..
EVP purchased 12,500 shares in March at $1.03 and interim CFO bought 11,000 shares at $1.02.
Up 19%, HOLD

Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)
Buy Price-$5.08
Valuation $15.85 (was $14.13, $11.38, $14.04, $18.54, $15.99)
Closed up $.33 at $4.48
Pays $.24 annual dividend.
Singer/Miller bought another 33,000 shares in early July at $3.88. They now own 12.1% of CCUR.
CCUR took on two of the Singer/Miller Board nominees and entered into a standstill agreement until the 2012 Shareholders meeting.
CCUR announced the initiation of a quarterly dividend of $.06 or $.24 annually in July.
Another 13D filed in June by what looks like another disgruntled shareholder (Stephen D. Baksa). Owns 435,000 shares or 5%.
13D/A filed in June disclosing another 100,000 shares purchased on June 13th by the Singer/Miller group for $3.75. Their combined ownership is now 11.7%.
Singer is also involved in MRV and was involved with Evolving Systems (which we owned personally even though we didn’t recommend it—it was a huge winner).
Earnings announced in May. Not bad. Revenues were down $2 million to $16.3 million but they made $.04 per share. Cash fell to $2.61 per share as receivables rose. Our valuation rose to $15.85, the second quarter of rising valuation and just about back to when we recommended it. Now the price just needs to reflect the improvement.
Down 12%, HOLD

Astex Pharmaceuticals Inc. (Was SuperGen Inc.) (NASDAQ-ASTX)-Recommended 10/4/2010)
Buy Price-$2.31 (was $2.09 before adding $10,000)
Valuation $3.16 (was $3.44, $3.42, $3.22, $3.11, $5.21, $4.89, $4.37, $3.48)
Closed up $.20 at $2.42
Earnings announced in August. Revenues were up to $19.9 million from $11.7 million and they made $.01 per share the same as last year. Cash was $121 million or $1.18 per share. They raised their earnings guidance to a loss of only $5 million from $15 million. All in all a good report. Our valuation fell however to $3.16 as revenues, cash and earnings were all a bit lower than last quarter.
ASTX rallied earlier in July as they announced that Janssen-Cilag International NV was notified that the Committee for Medical Products for Human Use (CHMP) of the European Medicines Agency (EMA) granted a positive opinion recommending approval of DACOGEN(R) (decitabine) for Injection in the treatment of adult patients (age 65 years and above) with newly diagnosed de novo or secondary acute myeloid leukemia (AML), according to the World Health Organization (WHO) classification who are not candidates for standard induction chemotherapy. Janssen is the licensee for DACOGEN in territories outside of the United States, Canada and Mexico.
So we have a company losing maybe $5 million in cash a year, or 25 years of cash, about $80 million in revenues and a huge drug pipeline. Any good news on the clinical trials front ought to set this stock on fire.
It is not easy to find a small drug company with substantial revenues, that has a pile of cash, is not losing a ton of money and is trading at even close to our valuation.
There are $2 BILLION of potential milestone payments down the road.
Up 5%, HOLD

Extreme Networks (EXTR-Recommended 3/22/2010)
Buy Price-$3.18 (Was $3.04 before adding another $10,000)
Valuation-$7.46 (was $6.31, $7.01, $6.72, $6.45, $5.67, $7.36, $7.23, $7.31, $6.82, $6.81)
Closed at $3.23 down $.07.
Earnings announced in August. We liked the quarter. Revenues were $87.6 million and they made $.08 a share profit compared to $.02 loss last year. Cash per share rose to $1.61. Our valuation rose to $7.46 compared to the same quarter of last years $6.45 as gross margin rose to 56% compared to 46% last year.
They are projecting next quarter at sales of $75-$82 million and EPS of $.00 to $.03.
Starboard owns 9.7%, Soros 8.8% and Blackrock owns 5.5% of EXTR.
Up 2%, BUY

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Buy Price- $1.45 per ADS (Was $1.68 before double up)
Valuation $5.52-(Was $5.00, $5.39, $5.33, $5.61, $5.73, $4.38, $4.44, $5.15)
Closed down $.02 at $1.64
Now trading at below cash value again.
Q1 earnings announced in May. Nice. Revenues were $14.4 million and they made $1 million or $.04 per ADS. Cash was $48 million or $1.74 per share. No update on how Ragnarok 2 was doing or rumored Face Book games. Short term holders were disappointed as the stock fell. We are thrilled that cash and revenues went up from last quarter and our valuation rose to $5.52.
Ragnarok was commercially released in Korea on March 26th.
Up 13%, BUY

AEterna Zentaris (AEZS-Recommended 6/20/2009)
Buy price $1.42 (was $1.78 before adding another $10,000, $1.82 before double up)
Valuation –Speculation.
Closed at $.43 up $.04
Earnings due out Tuesday, August 14th after the market close.
AEZS announced that Perifosine failed in April. Carnage followed. Hmm, this will teach us a lesson to not recommend speculations any more. We are still holding ours as a lottery ticket.
Earnings out in March. Revenues for the quarter were $12.6 million, up from $10 million last year. Net loss was $7.5 million compared to $6.6 million last year. The net loss for the year was $29 million. Cash stood at $47 million and they continue to sell more stock. They sold another 3.6 million in 2012 so far and raised $6.4 million.
Speculative for sure.
Down 70%, HOLD

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $5.68 (was $8.90, $9.40 before adding $10,000, and was $10.65 before double up),
Valuation –$16.00 (was $14, $12, $10)
Closed up $.64 at $11.99
Earnings announced in July. Well it appears they did not screw anything up and the stock rebounded to hit a new high of $12.14. Sales were up 9% YOY and they made $.02 a share (same as last year). They did raise annual guidance to 8-10% revenue growth versus 5-7% previously. The stock seems like it wants to go higher.
A Board member bought 6,000 shares on May 25th, at just over $9.90. Good show of support at this level.
This company needs to be sold so that someone can take advantage of their 70%+ gross margins and enjoy some profits.
Up 111%, HOLD

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up)
Valuation $19.24 (was $18.15, $17.96, $18.34, $16.07, $15.04, $14.23, $15.02, $14.35, $12.13, $12.57, $12.29, $11.90, $11.30, $11.48, $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Closed up $.73 at $14.02
MEDW announced another acquisition of a blood management consulting company last week. No financial details (as usual).
Earnings announced in May. Another good report. Revenues increased 22% and they made $.22 per share compared to $.17 last year. Cash is closing in on $4.50 a share ($4.42). Our valuation rose to $19.24.
All we read is that medical records will be a hot area, so MEDW looks like the place to be.
Up 121%, HOLD

Inuvo (INUV (was-VTRO, MIVA)-Recommended 10/21/2007)
Buy Price $8.15 (Was $11.90 before adding another $20,000, $13.10 before another $10,000 and was $15.00 before double up),
Valuation $1.84 (was $8.04, $10.91, $12.42, $14.23, $14.76, $12.40, $12.55, $10.85, $8.25, $9.45, $28.05, $32.10, $34.20, $37.90, $37.95)
Closed at $.54 down $.10
Earnings announced last week. Mediocre. Revenues were $12.9 million and they lost $3 million. This loss included some heavy non-cash charges related to the merger so adjusted EBITDA was $200,000. Our valuation was $3.11 compared to our estimate of $3.59.
Down 90% HOLD

Angeion Corporation (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $11.95 (was $13.36 $15.90, $13.13, $13.19, $13.60, $15.00, $13.06, $12.15, $11.29, $11.73, $11.47, $11.16, $9.53, $13.30, $13.03)
Closed down $.14 at $5.51
Earnings announced in June. Hmmm. Sales were down from $6.8 million last year to $6.3 million. They lost $.4 million versus $.1 million last year. Not great, but they blamed it on a few large customers pushing out some orders into the current quarter. We’ll see soon, cause then this quarter should be a barn burner. Our valuation slipped to $11.95 ($13.19 last year). Cash was $2.45 per share versus $2.42 last quarter. They also disclosed that they had entered into a Letter of Intent (LOI) to sell their New Leaf business and were going to change their name to MGC Diagnostics Corporation. Well at least that sounds like a medical company.
If this company could just show a bit of growth I think we would see $10 in short order—if.
Blueline Partners still owns 7.6% of ANGN and ought to be pushing on the company to do something about the stock price.
While ANGN is still trading at less than ½ our valuation, we are switching to a HOLD until we gets some results or news that improves the prospects here.
Up 44%, HOLD

OB-abies (Bulletin Board Listed Stocks)

As proven by OPTIO, patience is necessary with these stocks.

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up),
Valuation $6.13 (was $5.82, $5.81, $5.72, $5.65, $5.39, $4.86, $5.60, $5.73, $5.54, $5.74, $5.96, $4.72, $5.19, $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $.95 up $.05.
Earnings announced in June. Not bad. Sales were up 7% to $5.7 million and they made $.03 a share down from $.07 last year as they spent more on technology infrastructure, investor relations and product development.
Our valuation moved up to $6.13—the highest ever since we have been following the stock. No one cared as the stock didn’t trade after the earnings announcement. Looks like they need to even spend more on investor relations and PR.
Now down 41%, BUY, Still a Huge valuation gap here.

Rand Worldwide (RWWI.ob (Was Avatech, AVSO.ob)-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $2.55 (was $2.08, $2.09, $2.12, $2.60, $2.40, $1.90, $2.26 $3.07, $3.03, $2.38, $2.57, $2.81, $2.78, $3.30, $3.76, $4.00 $3.41, $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.80, unchanged
RWWI announced an acquisition in August. No financial details. The acquisition was in computational fluid dynamics (CFD) analysis consulting and thermal simulation services that provide design insight allowing customers to make better informed design decisions without distractions to their current development processes.
Earnings announced in May. Not bad. While sales were down to $22 million from $27 million last year (last year included a one big order), they made $.03 a share compared to $.04 last year. Margins increased to just over 50% from 47% last quarter. Our new valuation is $2.55 a share, down $.05 from last year.
Peter Kamin the new Chairman of the Board filed a 13d in March disclosing an 11% ownership state. Interesting as one would file a 13G if their intention was to just be a passive investor. Maybe as Chairman he will do SOMETHING to get the share price up.
RWWI announced an acquisition in March, but gave no financial details. “If a tree falls in the forest but there is no one around to hear it, dies it make a sound”? Seems like the company is making no effort to get this company known to the investment community. We have been in this one a LONG time and are getting impatient.
Market cap of $43 million for a $90 million in sales company with 50% margins and not losing money, just too cheap.
Our valuation is 3X the current price.
Up 1%, HOLD

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.34 (Was $1.37, $1.36, $1.23, $.91, $1.21, $.71, $.83, $.88 $.96, $.93, $.75, $.85, $1.57, $1.40, $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price $.23 closed at $.21.
CTIG announced a product deal with Mitel in June. Any PR is good news here.
A Director purchased 30,000 shares on May 23rd at $.25 a share. Not a lot of money but a good sign that things are going well.
Earnings announced in May. Sales were up $250k over last year to $4.4 million and they made $113k versus a loss of $342k last year. Cash rose to $3.7 million or $.13 per share. Our valuation fell $.03 to $1.34 but this is up from $.91 a year ago. Three profitable quarters in a row.
At an $8 million market cap, this is stupidly cheap. Their intellectual property is probably worth 3 times this price. They need to liquefy this value somehow.
Still an “undercover” company and stock.
Down 15%. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $1.68 (Was $1.80 before $10,000 adder, $2.16 before double-up)
Valuation-$.85 (Was $1.05, $2.43, $4.11, $4.84, $4.98, $4.60, $3.82, $4.00, $3.68, $3.12, $3.98, $4.44, $3.22, $2.12, $4.56, $4.16)
Closed at $.04, unchanged.
Now LTUS announced in April that they have no money for audits and SEC filings. Hammered down to less than a nickel a share. Can you spare them some money? Not worth selling at this point until we need tax losses. Maybe something good will happen. What a disaster. No more Chinese stocks for us, no matter how compelling the valuation.
Earnings announced in November. Revenues were up slightly over last year at $19 million versus $18.3 last year, but gross margins remained low and they made $2.1 million of $.04 per share compared to $.25 last year. Our valuation fell again to $.85.
Down 98%, HOLD

Cheap Stocks, 8/3/2012 Update

Not a good week for us at all. PTIX, CTIG and ARIS were all down 18% or more. PTIX for good reason. Overall we were down a whopping 2.3% and our YTD gain dropped to 9%.

Some of our stocks are just stupid cheap—compared to their net cash on hand per share divided by their stock price.

Check this list:
RIMG 89%
EXTR 49%
GRVY 105%
CCUR 64%
MTSL 46%
SIGM 63%
ASTX 53%
CTIG 75%
MRVC 68%
ANGN 43%
AVNT 72%

Plus, EXTR, RIMG, ANGN, SIGM and MRVC.PK are all in “play” with activist shareholders either trying to get them to pay out special dividends or take them over, or they are pursuing “strategic alternatives”.

The DOW was up .2% last week, NASDAQ was up .3% and the Russell 3000 was up .2%.

ASTX,CBEY, EXTR, and PTIX earnings last week.

AVNW, CBEY, MTSL, GRVY, and MITL are our favorites.

For the year, the DOW is up 7.2%, NASDAQ is up 13.9%, and the Russell 3000 is up 10%

Last week we went 8 stocks up, 14 down and 2 unchanged. Since inception we are now 57 stocks up and 17 down for a 77% winning percentage (80% is our target win %).

Since our beginning, we have closed out the following positions:
2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
2008-BDAY -39% (long overdue takeover offer-or “take-under”)
2008-DTLK +40% (third trip on this one)
2008-ILOG +26% (Buy-out offer from IBM)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33%
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL +78%
2010-CCEL +49%
2010-HPOL +27%
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%
2011-PRM +56% Buyout (1 week after we recommended it)
2011-RST +12%
2011-NINE -10%
2012-BVSN +30%
2012-TISA +137%

The model portfolio assumes $10,000 invested in each stock (unless we double-up–then it is $20,000), less $10 commission each way (TD Ameritrade rate).

For the 50 stocks that we closed out since 2006 (45 were winners) the average net gain was 38%.

Telecommunications Systems Inc. (NASDAQ-AVNW)-Recommended 6/14/2012)
Buy Price- $1.37
Valuation $6.72 (Was $5.49)
Closed up $.04 at $1.40
Earnings announced in July. They were fine. Revenues were up 14% to $114 million and cutting through all the goodwill write-off it looks like they made $1.5 million on an operating basis. Our valuation rose to $6.72. After falling to around $1.15 the stock popped back up to close at $1.36 when it became apparent the sky was not falling.
TSYS announced an acquisition on in July. They are buying the leader in 911 communications for $37 million.
Up 2%, BUY

Aviat Networks Inc. (NASDAQ-AVNW)-Recommended 2/27/2012)
Buy Price- $2.62
Valuation $8.85 (Was $8.31)
Closed down $.11 at $2.11
The stock continues to drop on no news. But so did SPNC, CBEY and TSYS before earnings for no reason and then popped back quickly. Let’s hope we have the same case here.
Earnings out in May. Revenues were down $4 million to $111.6 million, but they made $2.2 million on a Non-GAAP basis versus losing $.4 million last year.
Our valuation rose to $8.85 and cash per share rose to $1.53.
Down 20%, BUY

CBeyond Inc. (NASDAQ-CBEY)-Recommended 2/28/2012)
Buy Price $7.17- ( Was $7.94 before another $10,000 added at $6.53)
NEW Valuation $29.59 (Was $29.58, $29.21)
Closed up $.75 at $8.01
Earnings out last week. They were good. Revenues were up 3%. They made a profit of $1.5 million ($.05 per share) compared to a loss of $1.8 million last year. Cash flow was positive and our valuation rose $.01 to $29.59 per share.
Up 12%, BUY

MRV Communications (Pink Sheets-MRVC.pk)
Valuation $1.73 (Was $2.06, $2.16 (after $.475 and $.30 special dividends), $2.62, $2.79)
Buy Price October 7, 2011- $.50 ($1.27 before special dividends)
Closed at $.57 down $.02
MRV announced that they had settled a lawsuit related to a past acquisition and will pay $2.3 million, but get a $2.2 million gain this quarter as the settlement was less than they had booked.
The $.30 special dividend was paid in June
Raging Capital continues to buy shares. They now own over 27 million shares or 17.6% of MRV.
Earnings announced in May. All numbers have been restated for the CES sale in Q1.
Sales fell from $53 million to $48 million and the lost about $3.5 million pre-tax (after taking out stock compensation and a CFO severance charge). MRV declared another special dividend last week. $.30 a share this time. This will leave them with about $47 million of cash or another $.29 a share. Our valuation fell to $1.73 per share. Cash was $.59 per share. After the special dividend payable this month, our adjusted valuation will be $1.43 and assuming the stock price falls by the same amount, the stock will be trading at about 50% of our valuation.
Up 6% HOLD

Sigma Designs Inc. (NASDAQ-SIGM)-Recommended 7/11/2011)
Buy Price-$8.49
Valuation $10.67 (Was $8.41 $12.10, $13.40, $16.02)
Closed up $.08 at $6.82
Sigma and Potomac settled their war, at least temporarily as Potomac will get two Board seats.
Earnings announced in May. Still losing money but sales were up to $40 million from $36 million last quarter. They lost $8.5 million on a non-GAAP basis versus $14 million last quarter. Net cash per share fell a bit to $4.32. Over all our valuation increased about 25% to $10.67. Not bad, but not good enough to buy any more here.
They are projecting sales for next quarter (Q2) to be between $61-$67 million with 45% GAAP margins. Operating breakeven is expected in Q4 including the Trident acquisition which is expected to contribute about $24 million of sales per quarter.
So we are trading at a market cap of about $70 million (excluding cash) for a $$200 million a year chip company with 50% margins. Still pretty stupid we think. We plan to hold on for another couple of quarters to see if they can turn this around.
Down 20%, HOLD

Mitel Networks (NASDAQ-MITL)-Recommended 7/6/2011)
Buy Price- $3.04( Was $3.36 before $10,000 added, $3.95 before $10,000 added)
Valuation $13.92 (Was $12.81, $15.28, $14.04, $10.39)
Closed up $.09 at $4.41
Earnings announced in June. Another very good quarter. Sales were up about 4% to $158 million and they made $17.1 million of income on a Non-GAAP basis. Our valuation rose to $13.92. MITL appears to be running on all eight cylinders now.
Up 45%, BUY

Rimage (NASDAQ-RIMG)-Recommended 5/24/2011)
Buy Price-$14.20
Valuation $$14.03 (Was $19.81, $22.23, $25.63, $26.45)
Closed down $.13 at $6.85
Pays $.68 a share annual dividend.
We have collected $.54 of dividends since we recommended RIMG.
Earnings announced in July. Well not really earnings. Revenues fell 9% to $18.3 million, margins fell to 45% from 49% last year and they lost $2.75 million or $.27 per share. Qumu revenues were a whopping $1.4 million. Cash fell to $62.3 million or $6.13 and our valuation fell again to $14.03
This is the worst case of management squandering its assets on an acquisition to escape being bought out and fired. We have lost over $12 on our valuation and the stock is down over 50% Spent over $40 million to buy Qumu’s paltry revenue stream.
They are now projecting next quarter to be $20-$22 million of revenue and only lose $.02-$.10 per share. Guidance for 2012 is low double digit sales growth and the same level cash flow.
Teetering on selling here despite the yield.
Down 52%, HOLD

Lexmark International (NYSE-LXK)-Recommended 5/24/2011)
Buy Price-$28.80
Valuation $70.28 (Was $62.59, $63.94, $63.84, $79.12, $63.99)
Closed up $.59 at $17.92
We have also collected $.80 a share in dividends here.
LXK now pays a $1.20 annual dividend.
Earnings announced in July. Revenue fell 12% and Non-GAAP earnings fell to $.89 a share from $1.36 a year earlier. Currency and Europe were blamed for the shortfall. Q3 guidance is another 10% revenue decline and Non-GAAP earnings of $.75-$.85 compared to $.95 last year. Our valuation actually increased on a gross margin increase to $70.28 and net cash fell a bit to $3.85 a share as they bought back 800,000 shares for $25 million and paid their quarterly dividend. This is why we don’t like Wall Street analysts. They would rather pay 100 times earnings for some maybe good company than a proven cash machine like LXK. Yield is now 6.9%
They reiterated their intent to return over 50% of their free cash flow to shareholders in dividends and share repurchases. The vagaries of the stock analysts make us cautious but we are back down well below our original buy price so we are making this a Buy again.
Down 38%, BUY

MER Telemanagement (NASDAQ-MTSL)-Recommended 5/17/2011)
Buy Price-$1.42 (Was $1.50 before adding another $10,000 investment)
Valuation $5.77 (Was $5.55, $6.28 $5.61, $5.11)
Closed down $.11 at $1.73
Earnings announced in May. Sales were up from $2.8 million to $3 million and they made $.07 per share versus $.03 last year. With $.80 a share in cash, this is trading at about 4X annualized earnings. Way too cheap. Our valuation rose to $5.77 per share.
Up 22% BUY

Harris Interactive (NASDAQ-HPOL)-Recommended 3/3/2010)
Buy Price-$.92
Valuation $3.15 (Was $3.05, $2.90, $3.11, $2.63, $2.97)
Closed at $1.11, down $.07
Earnings announced in May. Sales dropped $3 million from $37 million to $34 million. Their loss was slashed from $2.3 million to $.3 million. Not bad. Our valuation rose to $3.15 per share. If they can get some sales momentum over the next couple of quarters we could see $2 plus. If……..
EVP purchased 12,500 shares in March at $1.03 and interim CFO bought 11,000 shares at $1.02.
Up 21%, HOLD

Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)
Buy Price-$5.08
Valuation $15.85 (was $14.13, $11.38, $14.04, $18.54, $15.99)
Closed up $.05 at $4.15
Singer/Miller bought another 33,000 shares in early July at $3.88. They now own 12.1% of CCUR.
CCUR took on two of the Singer/Miller Board nominees and entered into a standstill agreement until the 2012 Shareholders meeting.
CCUR announced the initiation of a quarterly dividend of $.06 or $.24 annually in July.
Another 13D filed in June by what looks like another disgruntled shareholder (Stephen D. Baksa). Owns 435,000 shares or 5%.
13D/A filed in June disclosing another 100,000 shares purchased on June 13th by the Singer/Miller group for $3.75. Their combined ownership is now 11.7%.
Singer is also involved in MRV and was involved with Evolving Systems (which we owned personally even though we didn’t recommend it—it was a huge winner).
Earnings announced in May. Not bad. Revenues were down $2 million to $16.3 million but they made $.04 per share. Cash fell to $2.61 per share as receivables rose. Our valuation rose to $15.85, the second quarter of rising valuation and just about back to when we recommended it. Now the price just needs to reflect the improvement.
Down 18%, HOLD

Astex Pharmaceuticals Inc. (Was SuperGen Inc.) (NASDAQ-ASTX)-Recommended 10/4/2010)
Buy Price-$2.31 (was $2.09 before adding $10,000)
NEW Valuation $3.16 (was $3.44, $3.42, $3.22, $3.11, $5.21, $4.89, $4.37, $3.48)
Closed down $.25 at $2.22
Earnings last week. Revenues were up to $19.9 million from $11.7 million and they made $.01 per share the same as last year. Cash was $121 million or $1.18 per share. They raised their earnings guidance to a loss of only $5 million from $15 million. All in all a good report. Our valuation fell however to $3.16 as revenues, cash and earnings were all a bit lower than last quarter.
ASTX rallied earlier in July as they announced that Janssen-Cilag International NV was notified that the Committee for Medical Products for Human Use (CHMP) of the European Medicines Agency (EMA) granted a positive opinion recommending approval of DACOGEN(R) (decitabine) for Injection in the treatment of adult patients (age 65 years and above) with newly diagnosed de novo or secondary acute myeloid leukemia (AML), according to the World Health Organization (WHO) classification who are not candidates for standard induction chemotherapy. Janssen is the licensee for DACOGEN in territories outside of the United States, Canada and Mexico.
So we have a company losing maybe $5 million in cash a year, or 25 years of cash, about $80 million in revenues and a huge drug pipeline. Any good news on the clinical trials front ought to set this stock on fire.
It is not easy to find a small drug company with substantial revenues, that has a pile of cash, is not losing a ton of money and is trading at even close to our valuation.
There are $2 BILLION of potential milestone payments down the road.
Down 4%, HOLD

Performance Technology (PTIX-Recommended 3/30/2010)
Buy Price-$2.70
NEW Valuation $3.07-(was $6.01, $6.17, $5.94, $4.87, $4.99, $3.79, $3.87, $5.03, $5.98, $7.13)
Closed down $.54 at $1.50
Earnings announced last week. They were horrible and we are selling. Sales were down to $5 million from $8.5 million last year and they lost $1.8 million compared to $.5 million last year. Their lack of confidence in the future scares us. Cash and investments were $1.44 per share, up $.04 from last quarter but our valuation plunged to $3.07 from $6.01.
Down 44%, SELL

Extreme Networks (EXTR-Recommended 3/22/2010)
Buy Price-$3.18 (Was $3.04 before adding another $10,000)
NEW Valuation-$7.46 (was $6.31, $7.01, $6.72, $6.45, $5.67, $7.36, $7.23, $7.31, $6.82, $6.81)
Closed at $3.30.
Earnings announced last week. We liked the quarter. Revenues were $87.6 million and they made $.08 a share profit compared to $.02 loss last year. Cash per share rose to $1.61. Our valuation rose to $7.46 compared to the same quarter of last years $6.45 as gross margin rose to 56% compared to 46% last year.
They are projecting next quarter at sales of $75-$82 million and EPS of $.00 to $.03.
Starboard owns 9.7%, Soros 8.8% and Blackrock owns 5.5% of EXTR.
Up 4%, BUY

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Buy Price- $1.45 per ADS (Was $1.68 before double up)
Valuation $5.52-(Was $5.00, $5.39, $5.33, $5.61, $5.73, $4.38, $4.44, $5.15)
Closed down $.08 at $1.66
Now trading at below cash value again.
Q1 earnings announced in May. Nice. Revenues were $14.4 million and they made $1 million or $.04 per ADS. Cash was $48 million or $1.74 per share. No update on how Ragnarok 2 was doing or rumored Face Book games. Short term holders were disappointed as the stock fell. We are thrilled that cash and revenues went up from last quarter and our valuation rose to $5.52.
Ragnarok was commercially released in Korea on March 26th.
Up 14%, BUY

AEterna Zentaris (AEZS-Recommended 6/20/2009)
Buy price $1.42 (was $1.78 before adding another $10,000, $1.82 before double up)
Valuation –Speculation.
Closed at $.39 down $.02
AEZS announced that Perifosine failed in April. Carnage followed. Hmm, this will teach us a lesson to not recommend speculations any more. We are still holding ours as a lottery ticket.
Earnings out in March. Revenues for the quarter were $12.6 million, up from $10 million last year. Net loss was $7.5 million compared to $6.6 million last year. The net loss for the year was $29 million. Cash stood at $47 million and they continue to sell more stock. They sold another 3.6 million in 2012 so far and raised $6.4 million.
Speculative for sure.
Down 73%, HOLD

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $5.68 (was $8.90, $9.40 before adding $10,000, and was $10.65 before double up),
Valuation –$16.00 (was $14, $12, $10)
Closed down $.64 at $11.35
Earnings announced in July. Well it appears they did not screw anything up and the stock rebounded to hit a new high of $12.14. Sales were up 9% YOY and they made $.02 a share (same as last year). They did raise annual guidance to 8-10% revenue growth versus 5-7% previously. The stock seems like it wants to go higher.
A Board member bought 6,000 shares on May 25th, at just over $9.90. Good show of support at this level.
This company needs to be sold so that someone can take advantage of their 70%+ gross margins and enjoy some profits.
Up 100%, HOLD

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up)
Valuation $19.24 (was $18.15, $17.96, $18.34, $16.07, $15.04, $14.23, $15.02, $14.35, $12.13, $12.57, $12.29, $11.90, $11.30, $11.48, $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Closed down $.26 at $13.29
Earnings announced in May. Another good report. Revenues increased 22% and they made $.22 per share compared to $.17 last year. Cash is closing in on $4.50 a share ($4.42). Our valuation rose to $19.24.
All we read is that medical records will be a hot area, so MEDW looks like the place to be.
Up 110%, HOLD

Inuvo (INUV (was-VTRO, MIVA)-Recommended 10/21/2007)
Buy Price $8.15 (Was $11.90 before adding another $20,000, $13.10 before another $10,000 and was $15.00 before double up),
Valuation $1.84 (was $8.04, $10.91, $12.42, $14.23, $14.76, $12.40, $12.55, $10.85, $8.25, $9.45, $28.05, $32.10, $34.20, $37.90, $37.95)
Closed at $.64 up $.13
Next earnings due out Thursday, August 9th, after the market close.
Earnings announced in May. The quarter only contained 1 month of combined operations after the merger. Sales for the quarter were $8.8 million and they reported $.2 million of adjusted EBITDA. The actual loss was $1.8 million. Our valuation plummeted to $1.84 a share based on the reported numbers. Our “guesstimate” valuation for a full quarter of combined operations is $3.59.
Down 88% HOLD

Angeion Corporation (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $11.95 (was $13.36 $15.90, $13.13, $13.19, $13.60, $15.00, $13.06, $12.15, $11.29, $11.73, $11.47, $11.16, $9.53, $13.30, $13.03)
Closed down $.13 at $5.65
The CEO bought 3,400 shares at $5.73 on June 13th.
Earnings announced in June. Hmmm. Sales were down from $6.8 million last year to $6.3 million. They lost $.4 million versus $.1 million last year. Not great, but they blamed it on a few large customers pushing out some orders into the current quarter. We’ll see soon, cause then this quarter should be a barn burner. Our valuation slipped to $11.95 ($13.19 last year). Cash was $2.45 per share versus $2.42 last quarter. They also disclosed that they had entered into a Letter of Intent (LOI) to sell their New Leaf business and were going to change their name to MGC Diagnostics Corporation. Well at least that sounds like a medical company.
If this company could just show a bit of growth I think we would see $10 in short order—if.
Blueline Partners still owns 7.6% of ANGN and ought to be pushing on the company to do something about the stock price.
While ANGN is still trading at less than ½ our valuation, we are switching to a HOLD until we gets some results or news that improves the prospects here.
Up 48%, HOLD

OB-abies (Bulletin Board Listed Stocks)

As proven by OPTIO, patience is necessary with these stocks.

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up),
Valuation $6.13 (was $5.82, $5.81, $5.72, $5.65, $5.39, $4.86, $5.60, $5.73, $5.54, $5.74, $5.96, $4.72, $5.19, $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $.90 down $.20.
Earnings announced in June. Not bad. Sales were up 7% to $5.7 million and they made $.03 a share down from $.07 last year as they spent more on technology infrastructure, investor relations and product development.
Our valuation moved up to $6.13—the highest ever since we have been following the stock. No one cared as the stock didn’t trade after the earnings announcement. Looks like they need to even spend more on investor relations and PR.
Now down 44%, BUY, Still a Huge valuation gap here.

Rand Worldwide (RWWI.ob (Was Avatech, AVSO.ob)-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $2.55 (was $2.08, $2.09, $2.12, $2.60, $2.40, $1.90, $2.26 $3.07, $3.03, $2.38, $2.57, $2.81, $2.78, $3.30, $3.76, $4.00 $3.41, $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.80, up $.10
RWWI announced an acquisition last week. No financial details. The acquisition was in computational fluid dynamics (CFD) analysis consulting and thermal simulation services that provide design insight allowing customers to make better informed design decisions without distractions to their current development processes.
Earnings announced in May. Not bad. While sales were down to $22 million from $27 million last year (last year included a one big order), they made $.03 a share compared to $.04 last year. Margins increased to just over 50% from 47% last quarter. Our new valuation is $2.55 a share, down $.05 from last year.
Peter Kamin the new Chairman of the Board filed a 13d in March disclosing an 11% ownership state. Interesting as one would file a 13G if their intention was to just be a passive investor. Maybe as Chairman he will do SOMETHING to get the share price up.
RWWI announced an acquisition in March, but gave no financial details. “If a tree falls in the forest but there is no one around to hear it, dies it make a sound”? Seems like the company is making no effort to get this company known to the investment community. We have been in this one a LONG time and are getting impatient.
Market cap of $41 million for a $90 million in sales company with 50% margins and not losing money, just too cheap.
Our valuation is 3X the current price.
Up 1%, HOLD

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.34 (Was $1.37, $1.36, $1.23, $.91, $1.21, $.71, $.83, $.88 $.96, $.93, $.75, $.85, $1.57, $1.40, $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price $.17 closed at $.16.
CTIG announced a product deal with Mitel in June. Any PR is good news here.
A Director purchased 30,000 shares on May 23rd at $.25 a share. Not a lot of money but a good sign that things are going well.
Earnings announced in May. Sales were up $250k over last year to $4.4 million and they made $113k versus a loss of $342k last year. Cash rose to $3.7 million or $.13 per share. Our valuation fell $.03 to $1.34 but this is up from $.91 a year ago. Three profitable quarters in a row.
At an $8 million market cap, this is stupidly cheap. Their intellectual property is probably worth 3 times this price. They need to liquefy this value somehow.
Still an “undercover” company and stock.
Down 37%. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $1.68 (Was $1.80 before $10,000 adder, $2.16 before double-up)
Valuation-$.85 (Was $1.05, $2.43, $4.11, $4.84, $4.98, $4.60, $3.82, $4.00, $3.68, $3.12, $3.98, $4.44, $3.22, $2.12, $4.56, $4.16)
Closed at $.04, unchanged.
Now LTUS announced in April that they have no money for audits and SEC filings. Hammered down to less than a nickel a share. Can you spare them some money? Not worth selling at this point until we need tax losses. Maybe something good will happen. What a disaster. No more Chinese stocks for us, no matter how compelling the valuation.
Earnings announced in November. Revenues were up slightly over last year at $19 million versus $18.3 last year, but gross margins remained low and they made $2.1 million of $.04 per share compared to $.25 last year. Our valuation fell again to $.85.
Down 98%, HOLD