XRSC announced Q2 2014 earnings (quarter ended March 31, 2014) on May 8th. Revenues were $12.8 million down from $14.5 million last year. XRSC is a bit similar to BLIN as they are transitioning their legacy software business to a subscription based service and revenues take a hit as they don’t book a big software sale upfront, but rather record it monthly in smaller pieces. But subscription based revenues are generally worth more to a buyer than one-time sales. GAAP net loss was $.07 a share, compared to a gain of $.01 per share last year. Non-GAAP earnings were $1.2 million or $.04 per share compared to $2.2 million or $.08 a share last year. Our valuation rose to $5.60 up from $5.57 last quarter. XRSC is trading at about 50% of our valuation. We will continue to HOLD as results were not that exciting, but the valuation is still compelling.
CSI Update: Extreme Networks Inc.
Valuation-$8.52
Price May 7, 2014 : $3.95
We are back with EXTR. We sold EXTR in 2013 for a 63% gain. Then they decided to buy Enterasys and spend all their cash, but double the size of the company. So we sat on the sidelines. Now the price has fallen based on yesterday’s earnings report to less than 50% of our valuation and we are buying. We nibbled at EXTR just before earnings (our mistake) and were averaging down today. We will use all Non-GAAP numbers here, as all the accounting adjustments related to their merger, just don’t mean a thing to their business (pardon us SEC). Revenues came in at $143.7 million compared to the pre-merger $68.2 million last year. Earnings per share were $.02 compared to $.04 last year. Gross margins were 55% versus 56% last year. Net cash was negative $.16 per share. So in our view, a decent quarter. The company is still going through the merger integration and expects to achieve significant cost reductions ($30-$40 million a year).
For the upcoming quarter they expect to be at a $20 million saving run rate, versus $8 million in the March quarter. What apparently spooked the street and set the sellers off, was that they projected $145-$150 million in revenue for their Q4 (June 30, 2014) instead of the $159 million analysts were looking for. So the stock drops from $5.56 to $3.95 on over 9 million shares traded today. We think this is way overdone and that this is a good entry point. Trading at only 46% of our valuation we think this is a BUY.. There are about 100 million shares outstanding and it trades about 1.8 million shares a day.
About EXTR: Extreme Networks, Inc. (EXTR) is setting the new standard for superior customer experience by delivering network-powered innovation and market leading service and support. Extreme Networks delivers high-performance switching and routing products for data center and core-to-edge networks, wired/wireless LAN access, and unified network management and control. The Company’s award-winning solutions include software-defined networking (SDN), cloud and high-density Wi-Fi, BYOD and enterprise mobility, identity access management and security. Extreme Networks is headquartered in San Jose, CA and has more than 12,000 customers in over 80 countries.
CSI Update: Dex Media
DXM announced Q1 2014 earnings on May 6th. Revenues were $456 million down from $581 million last year (adjusting for the SuperMedia acquisition). GAAP net loss was $4.74 a share, compared to a loss of $.5.84 per share last year. Adjusted EBITDA was $194 million compared to $230 million last year. Not a bad quarter as YOY declines have been anticipated, but a bit below our expectations. DXM generated $97 million in free cash flow and paid down its debt by $74 million in the quarter. Net debt stands at $2.447 billion. Our valuation rose to $37.98 up from $34.36 last quarter. DXM is trading at about 20%% of our valuation, but due to the high debt level and small number of shares outstanding, relatively small changes in DXM’s results can cause large swings in our valuation. We will continue to HOLD.
It’s earnings season! I will be updating the blog more frequently during this time. If you don’t want to miss out, be sure to click the “follow” button on the left side of the page.
Cheap Stock Weekly Update May 5th 2014
Overall last week we were up 1.8% and are now up 4.9% for 2014. The DOW was up .9% and NASDAQ was up 1.2%. For the year, the DOW is down .4% and NASDAQ is down 1.3%
UNTD, TSYS and CCUR earnings last week.
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:
| UNTD | 43% |
| CCUR | 28% |
| SIGM | 71% |
| MRVC | 26% |
| SYNC | 55% |
BLIN, DAEG and UNTD can still be bought.
Last week we went 4 stocks up, 5 down and 3 unchanged. Since inception we are now 67stocks up and 17 down for a 79.8% winning percentage (80% is our target win %). Of our closed-out positions 59 have been winners and 13 have been losers for an 82% win percentage and a 34% average net gain per position.
Since our beginning, we have closed out the following positions: Continue reading
CSI Update: Telecommunications Inc. May 1st 2014
TSYS announced Q1 2014 earnings after the close on May 1. Revenues were $85.1 million down 10% from $94.8 million last year and up 8% from last quarter. GAAP net loss was $.01 the same last year. Non-GAAP net income was $.04, also the same as last year. Overall a decent quarter. Our valuation rose to $5.99 from $5.32 last quarter. TSYS is trading at about 42% of our valuation. Based on the valuation, this could be a buy, but we are up 85% and will just continue to HOLD here.
It’s earnings season! I will be updating the blog more frequently during this time. If you don’t want to miss out, be sure to click the “follow” button on the left side of the page.
CSI Update: United Online May 1st 2014
UNTD announced Q1 2014 earnings after the close on April 30th. Revenues were $55.4 million down 3% from $57.2 million last year. GAAP net loss was $.75 a share, compared to income of $.03 per share last year. OIBDA (operating income before depreciation and amortization-the term United uses, which is essentially EBITDA) was $3.2 million compared to $5.2 million last year. Overall an OK quarter. Our valuation rose to $32.35 from $27.86 last quarter. UNTD is trading at about 40% of our valuation and cash is 40% of the market cap ($4.79 a share versus $4.29 a share last quarter. Although it looks like the stock will fall this morning (it was up $.78 yesterday), we think this is a buying opportunity.
CSI Update: Concurrent Computer Earnings April 29th 2014
CCUR announced Q3 2014 earnings after the close today. Revenues were $18.3 million, up 8% from last year and EPS was $.12 up 9% from last year. Net cash was $2.47 per share. Overall a nice quarter. Our valuation fell slightly to $15.01 from $15.10 last quarter. CCUR is trading at 56% of our valuation and cash is 30% of the market cap. If we were not up 98% on this, we would think about buying it here based on the valuation.
Cheap Stock Weekly Update April 26th 2014
CBEY had a takeover offer last week. We sold it for a 37% gain in a little over 2 years. On the other hand we are selling GRVY for and booking a 36% loss after holding this for a bit over 4 years.
Overall last week we were up 1.8% and are now up 3.1% for 2014. The DOW was down .43% and NASDAQ was down .45%. For the year, the DOW is down 1.3% and NASDAQ is down 2.4%
No earnings last week.
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:
| UNTD | 37% |
| CCUR | 31% |
| SIGM | 64% |
| MRVC | 26% |
| SYNC | 55% |
BLIN, DAEG and UNTD can still be bought.
Last week we went 4 stocks up, 8 down and 2 unchanged. Since inception we are now 66 stocks up and 18 down for a 79.8% winning percentage (80% is our target win %). Of our closed-out positions 59 have been winners and 12 have been losers for an 83% win percentage and a 34% average net gain per position.
Since our beginning, we have closed out the following positions: Continue reading
CSI Tip: CBEY taken over this morning! Sell @ $9.85
CBEY got their take over offer this morning from Birch Communications at between $9.97 and $10 a share. While this is way below our valuation of $26.21 we generally don’t violate Rule #1—Take the money. We will book a 37.4% gain on this one.
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Cheap Stock Weekly Update April 18th 2014
Finally, an up week for us and the markets. We were up 1.5% and are now up 1.3% for 2014. The DOW was up 2.4% and NASDAQ was down 2.4%. For the year, the DOW is down 1.0% and NASDAQ is down 1.9%
No earnings last week and a slow news week.
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:
| GRVY | 172% |
| CCUR | 31% |
| SIGM | 62% |
| MRVC | 24% |
| SYNC | 52% |
BLIN, DAEG, GRVY and CBEY can still be bought.
Last week we went 9 stocks up, 4 down and 1 unchanged. Since inception we are now 66 stocks up and 18 down for a 78.6% winning percentage (80% is our target win %).
Since our beginning, we have closed out the following positions: Continue reading
