TRID - Sales up, Stock Way Down
TRID came out with solid sales results:
* Sales up 111% YoY (beat expectations by 12%), and up 34% since last quarter. They are clearly stealing market share from competitors.
* Cash has grown ~65% (from $106M to $170M), including $14M this last quarter.
* Guidance for next quarter is flat ('only' 75% growth YoY).
In essence, customers borrowed from next quarter to hit demand this quarter. Which is consistent with my assessment that OEMs were expecting this to be a huge holiday and were focused on sourcing for that.
Another good bit of news is that they are adding an unnamed top tier account.
BUT the options backdating issue continues. This is the 2nd quarter release without resolution. More concerning, they shifted tone from previous statements of 'no material impact' to 'yes, material impact.'
"The company said it expects charges to be material and decrease past earnings figures, but it has not yet finished calculating the amount of the charges or related tax and accounting costs, or determined which periods will be restated. ""Any such stock-based compensation charges would have the effect of decreasing income from operations, net income and retained earnings figures contained in the co's historical financial statements. The co does not expect that any additional non-cash stock-based compensation expense recorded will affect the co's previously reported cash positions or revs. The co is not yet able to determine the final amount of such charges or the resulting tax and accounting impact of these actions or the impact on internal control over financial reporting."
Will it affect today's earnings? I think so. While TRID said historical earnings will be changed, not current, there are issues such as taxes and penalties that must be handled today. And lawsuits.
The company spent $7M and at least 5 months reviewing and still has no conclusion. I don't like that. They aren't a large company, there aren't that many options grants. It sounds like they disagree with their accountants' findings. That doesn't pass the sniff test.
The manner in which this has been handled is bad. The fear and confusion makes for a dangerous and uncertain climate. They are alienating their own investors.
I expect the stock to drift down as low as $18 until they resolve this issue. I expect sell recommendations based on lack of faith in management's integrity. Which is a shame because they are delivering the goods in terms of sales growth and market position. If they could remove the FUD, I would see them hitting $30 immediately.
I bought back in today specifically because I expected them to resolve it and provide surprises. Well, we got surprised, and not in a good way.
The stock is trading just above $20: a 20% drop from 2 weeks ago. Word must have gotten out that they intended to delay the options resolution.
* Sales up 111% YoY (beat expectations by 12%), and up 34% since last quarter. They are clearly stealing market share from competitors.
* Cash has grown ~65% (from $106M to $170M), including $14M this last quarter.
* Guidance for next quarter is flat ('only' 75% growth YoY).
In essence, customers borrowed from next quarter to hit demand this quarter. Which is consistent with my assessment that OEMs were expecting this to be a huge holiday and were focused on sourcing for that.
Another good bit of news is that they are adding an unnamed top tier account.
BUT the options backdating issue continues. This is the 2nd quarter release without resolution. More concerning, they shifted tone from previous statements of 'no material impact' to 'yes, material impact.'
"The company said it expects charges to be material and decrease past earnings figures, but it has not yet finished calculating the amount of the charges or related tax and accounting costs, or determined which periods will be restated. ""Any such stock-based compensation charges would have the effect of decreasing income from operations, net income and retained earnings figures contained in the co's historical financial statements. The co does not expect that any additional non-cash stock-based compensation expense recorded will affect the co's previously reported cash positions or revs. The co is not yet able to determine the final amount of such charges or the resulting tax and accounting impact of these actions or the impact on internal control over financial reporting."
Will it affect today's earnings? I think so. While TRID said historical earnings will be changed, not current, there are issues such as taxes and penalties that must be handled today. And lawsuits.
The company spent $7M and at least 5 months reviewing and still has no conclusion. I don't like that. They aren't a large company, there aren't that many options grants. It sounds like they disagree with their accountants' findings. That doesn't pass the sniff test.
The manner in which this has been handled is bad. The fear and confusion makes for a dangerous and uncertain climate. They are alienating their own investors.
I expect the stock to drift down as low as $18 until they resolve this issue. I expect sell recommendations based on lack of faith in management's integrity. Which is a shame because they are delivering the goods in terms of sales growth and market position. If they could remove the FUD, I would see them hitting $30 immediately.
I bought back in today specifically because I expected them to resolve it and provide surprises. Well, we got surprised, and not in a good way.
The stock is trading just above $20: a 20% drop from 2 weeks ago. Word must have gotten out that they intended to delay the options resolution.
posted by Andrew at
3:48 PM
3 Comments:
Sell and keep the loss low? or hold till they come back to 22.xx? any advice?
how do we go about this?.Should we sell my stocks at the market price or should we continue to hold em?.Please advice.
Just dump it and move on.
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