I must be out over the Pacific somewhere. Let me know what you think. I'm busy until late tonight unfortunately, but I'll try to watch when I get home. I see the share price clawed its way back from the abyss today.
Post by christopher on Mar 15, 2016 18:27:41 GMT -5
This call wasn't any better or worse than the two previous.
One item that really stuck out was:
No one was asking questions, at all!
I wonder if anyone was in attendance? hard to tell. Where are all of the interested investors?
in fact, Krishna Shankar, the Roth analyst had to step in to ask his own questions.
There was not really anything different than what we already know, especially the fact that everything is behind schedule in a big way! Ramp dates,quarterly earnings amounts all included.
Last Edit: Mar 16, 2016 8:47:27 GMT -5 by christopher
I thought about that too Chris. It sounded as if there were maybe three people clapping at the end.
Gopi claimed that the delay in the ramp is caused by the qualification of the XGene parts taking a year longer than expected. How is moving the ramp from last year to next year one year? I'm counting two years.
Did you notice too that the spotlight subtly moved from XGene to 100G in the data center (PAM4)?
Where is Mr. Zepf? It only took two "softness in China" quarters beyond the projected ramp that did not materialize to get VTSS sold. If you don't turn it around, you're just burning money. Billy Martin knew the time value of money. Fix it, sell it, or close it down (Jack Welch), but don't dither.
There were also one or two specific questions about when we would see the ramp that were given vague weasel-y answers. A glib answer will get you through one, maybe two "iffy" quarters, but it shouldn't become a way of life.
The only thing at this point that can save AMCC's credibility is an actual product ramp. I have to believe that it is there somewhere, or else Zepf probably would be working hammer and tongs to get the business sold, but at this point, we just need to see some top-line growth!
So I see the ramp and the sale of the business as two sides to the same coin...if the product is not ramping, and only selling $1m per year...tell me again why someone like a QCOMM comes in and buys this for several hundred million dollars? Also, Gopi stated previously that he is not interested in selling pieces of the business, so it's all or nothing. The way I see it, if it doesn't ramp, then no sale.
There is only so much Mr. Zepf can do. Yes he owns a lot of stock, and now is a board member...but how can he call a QCOMM and get them to buy something that is literally generating $1m in sales...he'll get laughed out of the room. The real winners here are the management team that continues to receive attractive RSU's and options while the ramp continues to get pushed out...and I am sure Mr. Zepf is happy to take his $130k in stock based comp now too.
It would be interesting to know Mr. Zepf's cost basis. I wonder what the asking price is too. If you get too greedy you get nothing. The longer Zepf holds and the longer it takes AMCC to get it done, the higher the risk that this thing drops to zero. Nothing ages faster than technology. I doubt that $130k will cover Zepf's losses in the event of a problem. Who was it who said "the market can remain irrational longer than you can remain solvent"? I think they could get it sold, but the price might not meet someone's expectations.
So, we could probably say conservatively that Mr. Zepf is right at his cost basis.
I remember Billy Martin got around a 2.5 bagger out of VTSS -- not bad for 1.5 years work.
My educated hunch is that they could probably get the industry standard ($6 x 4/3) $8 right now.
If Zepf is looking for 2.5x his cost basis, that would be around $15, which would mean a recent trading range somewhere just north of $11.
Is Zepf waiting for at least VTSS-style returns? Does he think that AMCC can get the job done? I'm guessing he does, or we might be having a very different conversation.
Post by christopher on Mar 16, 2016 15:21:02 GMT -5
I am also guessing "AMCC can get the job done".
I also believe that the product lines should be up and running, pulling in significant revenue before a sale is to take place.
Also, if Mr. Zeph is wanting the most he can get for his investment, then he will not mind waiting until that significant revenue line begins to come in before pushing for such sale. At this point I cannot see anything under double digits.
Last Edit: Mar 16, 2016 15:33:47 GMT -5 by christopher
