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Blue, "but before I invest them with the trust I gave early on to SKS, personally I will need some proof they deserve it."
certainly a prudent sentiment. Carving out cancer and replacing it with an unknown is simply that.
Those that invested sub-buck after the management change (or now) with evidence that change was real (not in financial performance, but that it was not the simple replacement of a figurehead) would stand to gain much more than those who wait for demonstrated financial improvement, but they do so at considerable risk.
Your remarks regarding little evidence in change in process are true (IMO). A euphoria over new management has replaced a worship of old management. Where is a critical consideration of obstacles?
They are re-writing code/interface. Companies do that all the time. It regularly involves unforeseen difficulties, missed deadlines, or lack of acceptance. Critical consideration would involve an exploration of the magnitude of the undertaking e.g., and I see none of that.
There are incumbents. VSC seeks to replace smart cards and tokens at a fraction of the cost. Is the notion that smart card and token costs are cast in stone? Will the RSAs of the world sit static on yesterdays pricing levels? What would the resultant margin be? Will customers in the end stick with the familiar? What I see on this matter from a critical consideration standpoint is something to the effect of "relax, we are under new management".
None, I mean none of the revenue replacement notions have a single entry on an income statement. Samsung royalties? Go ahead, find some darts and throw them at the wall trying to guess what they may/will/could be and what is expected/not expected. Presumably one could try to determine e.g. Samsungs target TPM market, its size, and what a TSS contribution from Wave to Samsung is worth per device. That would be a form of due diligence seeking to uncover near term revenue replacement realities. CESG really has nothing to do with it. CESG is external to Wave, Wave's agreement with Samsung is internal to Wave, it represents a stated demand for Wave's products in the near term ... with no effort to quantify the royalty amount or unit volume.
Investing at this point is based almost entirely on the notion that Wave technology is indeed valuable, broadly valuable, and that the last team was inept at capturing that value. There is something to go on there, wave is not the only company diving into the VSC space e.g., Wave has been able to sell its technology in the past with decent pricing power, those that are willing to take on considerable risk do have something to go on, but I agree that little is being done in terms of critical consideration to evaluate those risks and outline metrics for measuring success.
I read this:
Daily chart technical: Buy
Weekly chart technical: Sell
Monthly chart technical: Buy
Fundamental: Buy
Investor Psychology: Buy
and almost choked. Wave's fundamentals are almost as bad as they can be, I am completely flabbergasted that one can call them a "buy" signal. There is a glimmer of hope for early high risk investors ... runway. Given Wave's abhorant fundamentals one needs runway, and the recent placement provides some runway. Now they just need to demonstrate some financial success (sales)that you are looking for. Prior to the placement there wasn't even the runway.
Given that the Q2 numbers are likely to come in as some of the worst in a very long time for Wave there will be plenty of grist for the argument of "no change, no progress". And then there will be "the plan" folks who will pick apart the numbers to look for whether the plan is engaging, regardless what the totals say.
And it should be great fun.
Unless the VSC launch occurs on schedule AND a significant order comes through prior to the Q2 report, in which case while the numbers for Q2 will say "no change, no progress", other public information will be available to contest that.
personally not much of a 'what couda been' person myself, probably the scifi buff thingy and the whole disrupted timeline notion. fact is my recent opportunity to invest in wavx may well only have been possible as a consequence of the considerable ineptitude and imo malfeasance of others. indeed there are those that argue that as part of the triumphant vision (I know, a remarkably repulsive and cynical sentiment).
Now, looking at the past and seeking lessons there to inform on the future ... well that I will dwell on. That some have passed does not diminish the lesson.
it is not particularly valuable for me in this position to discriminate between lies, exaggeration, errors, poor forecasting, insanity and so on. they all work out more or less the same, they all can variable be learned away or overcome, or not. I erred some time ago describing SKS' statements as irrational exuberance vs outright lying. overtime I came to feel he was a megalomaniac to the point where, again, discriminating between these things was entirely irrelevant. early on I judged him for poor forecasting (and I divested), it seem to improve (I invested), later his statements became entirely unmoored - his pie-hole became a firehouse of randomly assembled metaphors, insults, predictions, finger-pointing and self-aggrandizement (again, I divested). I thought his open market purchase of equity was overtly cynical, the contempt he showed for everybody and everything guaranteed his in-educability. I doubt he will ever turn an inward eye, but people surprise all the time. I will be stunned if Rivetz attracts capital (or not, i've seen some crazy people and things attract capital).
In the end I just don't care what he is or was. In the end there were SEC filings which one could choose to heed or ignore, there were forward looking statements one could choose to measure or not. I do believe at some point he only elevated his recklessness as the evidence was strong that there would never be consequences or accountability.
Then BS somehow was let into the building, pops withdrew support, and only the habitual finger pointers (GG, NB?) had his back to the point where even an inside stacked deck would no longer deal him in. He likely loathes those who let BS into the building as well of those who allied with him.
Oh well.
Wave has needed financing before,
and except for the Bain event, it has largely been a tale of missed opportunities built believing their own fantasies.
As I and others beat a donut drum when every opportunity to fund in the 2-3 range existed, they waited till dry and then glued together an ATM.
Some lamented the timing, price, discount, size etc. of the latest placement.
Time has spoken, it was genius.
In summary, it seems to me from this stuff that it is difficult to make a credible argument for a lack of demand.
The question of demand was simply not competently addressed.
Sometime around the Q3 report (or perhaps by Q2) one can assemble a notion of demand in the context of the notion having been more competently addressed. Dell did, after-all, buy Credant ... because there is no demand?? And they left Wave, perhaps less interested in waiting around for Win8 to somehow magically make Wave products attractive.
There will be those that say it is only that the market finally coalesced. Such an argument implies that a turnaround (if manifest) is coincidental on Solms hiring and that SKS was just unlucky in a timing sense.
I reject such notions of coincidence in advance.
what was said (as I recall) was from the following line of thought
... come to new company
... see things
... become boss
... do systematic review (all of this is stuff we've heard)
... in review look at efforts, focus, allocation ...
now in my reading of previous SHM reprots there was emphasis on something to the effect of switching from small sales focus to big fish focus. That is not what I got as the initial somewhat planned remark.
Instead what I recall was
' there was NOT much effort/focus/allocation in SEDs and ERAS, there was a good effort in SFND. ' and that stunned me, and hence my noting it. yes, later he mentioned that they are activily seeking to bag some big fish and so on, but the notion that particular product lines enjoyed more aggressive sales efforts stunned me (and solms imo) given that SFND is comparatively commoditized (as BS remarked).
But there was nothing said that I interpreted in 'set aside' fashion per se.
My personal pontification on this is more like this: SFND was acquired with staff, staff trained and led by other people for some time, staff that had focused on selling its COTS products for some time, and so they did what they do (sell and support the products they make). The Wave products are sold by Wave staff, trained by different people, represented by SKS, and that was an organizational nightmare of festering low morale, no metrics, and a defeatist 'they don't get-it' self-fulfilling cluster-fug of an overall corporate attitude that was waiting around for Win8 to save em, so they might was well cook up a new toy until softy rides to the rescue and/or the top was more interested in new toys and had grown bored or otherwise entirely uninterested in the hard work of tailoring, polishing, and selling an old toy. IMO had SFND been an organic Wave thingy, it too would have completely sucked in the moral/execution/polish etc. This whole paragraph is entirely my notions, not at all derived from anything else.
SFND was profitable in Q1 the way I read the report.
The BP thing certainly brought the question to light. Similarly the WEM thing as it was reported (largely only in notes to consolidated re:*.gov services contract) indicated that it was a platform by platform effort - bazillions of miles away from COTS - regardless of whether it was described as COTS in a CC highlighting the early adoption and inevitable takeoff of something that never sold even one more copy.
With WEM being tailored for supply chain attestation it seems at least some of the notions of it being a deep layer APT protection tool for broad consumption is some ways away. Certainly the supply chain application technically mirrors durable APT monitoring and protection, but one could imagine that the number of variables in supply chain attestation are fewer, that a COTS solution may be more achievable as a more confined to task.
There were see-em-once comments (folks rapidly banned and flamed into oblivion) that indicated first hand knowledge of serious flaws in usability/COTS/ready for primetime. Such comments sent me into the tech-bloggosphere to try to get a grip on user experience, but largely to no avail. Except for some stuff on biometrics that Wave blamed on somebody else there was little to find good or bad.
There is other stuff regarding the myopia of the previous admin that I am not inclined to share that can only be described as breathtaking. Once it became clear that PJS played at least some role in the change even if it was only to acknowledge its necessity, it simultaneously became clear to me that it must have been really really bad.
It seems every single suspicion was borne out. Morale. Focus. Resource allocation. Attention to detail. Product quality. Personalities. Interactions with potential clients. Arrogance. Insulting behavior and demeanor. Honesty. Integrity. No stone was left unturned in doing things poorly.
An essay in what not to do, who not to be.
yea, on cash I was kinda flattening things. I agree on Q2. Certainly in mgmnt dreams may well be announce VSC, announce a customer shortly after, then do the Q2 report with its trainwreck numbers
I was guessing ($3.9-4.5) for Q2
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=103480670
but Dell looks worse than I was plugging in, makes your 3-5 look pretty reasonable.
The lumpy nature of billings and revs may well be a bit chaotic which in part is why I was saying Q1 would look pretty decent. Both Q3 and Q4 lumps will be fully ratably manifest in Q1. No doubt that it looks like, with abacus in hand, that Q4 (or Q3 and a dry Q4 or wherever the lumps may fall)may well be effectively cfbe (according to what it looks like the plan more or less must be).
So, Q1'15 = SMB 2-3, SFND 1-1.5, the partnerships 1-2m, and if 10-12m of new big deals (NBDs) come through in 2014, then 2.5-3 of that books Q1 giving 6.5-9.5 GAAP which wouldn't include any Q1 NBDs.
Obviously the foggy elements are pricing power of a VSC seat and partnership contributions, other items have some history. I'm thinking wave acts a little more modestly in terms of price vs volume.
who knows, certainly makes for fun grist, and keeps getting back to the cfbe-ish at 35m-ish and what sort of multiple such a thingy would enjoy in what look like plan-ishy Q1issh.
I was pausing previously on parsing conclusions of the attendee versus statements of the presenters.
In that one Q&A bit where the questioner presented a theoretical recapitulation of events the answer firmed up discrimination between statements and audience conclusions.
Previously BS indicated he had traveled to all the big 3 to see how those accounts were, their satisfaction etc. The big 3 were generally happy, there was mention that one felt there was an issue they were having that was being under addressed. BS asked if there was anything else they could do. One of the big 3 responded, 'do you have a VSC solution?'
The VSC Q referenced above presented a timeline of,
RSA demo
Interested big 3 piloting
Prospect represents potential sale ca. product launch.
BS said, yes to RSA interest, yes to pilots, No to it being from the aforementioned big 3 mention, that is was a new customer, and finally affirmed (in so many words) that with respect to the 3/4/5 quarters sale cycle etc that it would be fair to assume that this customer is well along in that cycle and may purchase shortly after launch. I previously hadn't assembled that as a from the horses mouth thing. The questioner did a good job probing this issue by using a reconstruction of events versus the model timelines and stated launch dates.
It is worthy of a hopeful disposition. I'm going with 66.67% chance of an 8-k-ish deal within 4 weeks of launch.
I'm thinking BS is thinking 2,3,4 such deals by ye.
The plan appears to be to squeeze as much dell replacement as possible out of Sam-san-wyy-nec-Mu and to get to cfbe off the backs of VSC.
As Q1 ended with $4m and the PP was $10m and burn is $3-5m depending on dell vs dell replacement. As I am figuring Dell booking $0.5-1m tops, and Samsung is probably booking at least something, I'm going to call burn $4m.
Back adding then extrapolating puts $14m end of Q1, 3.5Qs of cash, claims of a cushion, mentions of some money for marketing and some additional engineering help ... it seems to me the plan calls for Q1'15 to be cfbe. Obviously the anticipated VSC thingy's are pulsey/astroidy in their receipt vs booking etc, butit looks to me like the plan coalesces around things looking decent Q1'15.
there was muttering about ARM etc,
the question was in regards to EMV and provisioning a credential and tablets and mobiles, it was asked where does the credential go ... fTPM/SIM/Trustzone etc., the CEO didn't want to pretend to know, the CTO stonewalled. It was a no comment variety resembling that for eSign.
I would have to re-review it, the question was direct, the answer meandered and landed on no comment.
Just a couple of points from the SHM presentation I don't recal seeing elsewhere.
On EMV and the business model. The customer is the bank. There are different fee structures for card present and card not present. Banks want the lower fraud/higher fee for "card present" for current card not present mobile transactions. They are working with wave to develop a solution that will satisfy "card present" as the chip does in a euro EMV card by provision hardware. The bank would not pass this on to the customer (the online business using e.g. VISA), they would simply pocket the delta and give wave a portion of that delta.
On cost cutting. while lots of heads rolled - much prior o the new admin, little was done to address efficiency other than cutting heads. They do now.
On dell replacement. It seems all partners are operating under new or tweaked agreements. Specifically listed: Samsung, sandisk, WYY, NEC, MU. These are all stated to be revenue generating ... royalty generating agreements.
On changes to enterprises targeted . Previously the effort focused on Safend products. Not so much SEDs and ERAS.So, worked over the ERAS/SED sales team, raised quotas, much coaching, have clear strategy etc. VSC is new primary focus, with SEDs and ERAs in tow.
On culture. Trying to get people excited about working at wave again. (I have long lamented the idea that moral must be awful).
On the PP. It was driven by SP opportunity and the transparency thingy. Pulled out an abacus, looked at burn, estimated c.f.b.e, and added a cushion. He reads the journal iHub Bean Counters so it was pretty easy. PP is already accounted for, it is for burn plus maybe a couple engineers to fix some things and some money for a targeted marketing thingy (for VSC).
On ATM toxicity. It was toxic to current shareholders, he would get bombarded every time the SP fell etc. Needed to put it down. Industry average for a WAVX type situation 11.44% discount, they got %11.2 percent. They are pleased.
On Spragues. PJS said, regarding his family, ".... we will try to get along." jeez.
Esign. Clearly on the block. deliberately terse in the "no comment" indicating clearly a non-public information item.
scrambls. Interesting tech, there is interest. It is not ready for anything now, Looking for investment.
chadder/rivetz. each going their own way, something to the effect of could not rteach a deal, but they aren't?/wont be infringing, kinda vague.
VSC, launch etc. It does look like they have at least one customer who may well be able to pull the trigger soon upon release. It is a big company. It is not GM, BASF, or BP. One of those three did express interest a bit ago (them asking Wave, do you have a VSC capability?). They are clearly hoping the big new customer buys on or near launch, that notion is definitely on the table. Claims that there is a significant who jumps first barrier to VSC, expects snowball effect on VSC. Expects competition to arise rapidly on VSC upon demonstrated Wave success on this. Currently mutliple pilots. v1 lacked comprehensive management tools.
Trying to upsell PwC, and some PwC peer companies.
WEM back to incubator (one of few things getting scarce resources. To target supply attetation solution with WEM. It was not ready for sale but a tweaked for one gov project thingy.
re eSignsytems,
musings are that esign is going to get sold or disposed. Beats me what if anything it is worth.
Recall from the last Q report that DocMagic has notified Wave that they believe eSign is infinging on a patent.
From the 10Q:
"In March 2014, the Company received a notice from DocMagic, Inc. alleging that certain of the Company?s eSignSystems solutions infringe upon a patent held by DocMagic, Inc. The Company is reviewing this matter and evaluating its defenses should DocMagic bring any claims."
FWIW Docmagic has been doing eMort for a long time:
https://www.docmagic.com/about
I like to Dream a little too,
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=103502079
but something in the hindbrain is screaming slog and msg board froth.
It might be NSA,
but it still looks pretty snuggly.
certainly the VSC thingy represents an opportunity for confidence and credibility building. They seem to do and say the right things, and as VSC was highlighted in the very first public communication as an example of an underperforming capacity and has been reiterated with increasing intensity and postulated promise in every communication since COM1, the table is set.
So, yes, I observe the opportunity to impress.
On the other hand, I don't do love affairs with new management regardless of how remarkably low the last management set the bar.
It is a difficult business, posts have already shown some flexibility at least in words/spin, leaving me with only hopeful caution.
I really want to see that Q2 report, that it comes after stated/anticipated vsc launch only adds to the opportunity for the second week of Aug to be rather informative.
Currently, I'm blindfolded on this whole cushion thingy. If one can draw a data driven cushion model that would bode well for the company and WAVX.
VSC is all over the map
v2 code ready for trial end of june
product in large trial now
product launch late july
product takes 3-5 quarters for deal closure cycle
impression deals waiting on v2 code release
Its pretty garbled from my perspective, not a thing I am saying I expect more clarity on per se. It is clearly a focus, measurables have been stated e.g. Q2 report/early Aug (post launch) will afford an opportunity to review the launch, speak towards trials, provide a little more structure to timelines.
Given the company has little to go on as far as moving VSC (a newness reality) the vagueness makes sense, but it seems a very positive front edge expectation is forming. And yet the company sees a cushion, so they must be expecting something somewhere.
ee-gads, what is a void to think. somewhere it was remarked that BS was suprised they were still receiving dell revs post nov-13 .... reconstruct the last 2 Qs w.o. Dell ... yikes. Imagine Q2 without 2m in Dell, yikes. I've been kicking around Dell at $1m Q2, perhaps being generous ... or not. Q2 puts numbers under notions of cushions and things.
A SHM note that seems swept under:
* Returning to VSC, said there was interest when just demo edition (Feb, with 3rd week July release for version 2) was ready and EVERYONE is a prospect. Long sell cycle though, 3/4/5 quarters.
Coupled with a *.gov goalpost slide and I struggle to speak with anything resembling confidence about any sort of cushion. But hey, they know more than I do, but they were pretty confident about *.gov x2 (both sides of the pond) and seem to have backed away from that.
3/4/5 quarters has VSC starting to really produce a year from now.
yes, there is the "large customer in trials", but that seems to be hanging a lot of hope on one asteroid.
Kinda would liked at least some notion of Samsung billings. The Q2 report can't come too soon.
Dell
Samsung
Organic sub-8k sales.
Cash
I'm curios how much MU development money has been booked, presumably will show up under services.
Some stuff stretches the imagination
PJS participating in offing the boy
An MS exec blaming Win8 liftoff stall on Wave with a Win7 solution
Dell was supposed to be gone gone, but customers keep wanting wave stuff
Finally one comment that indicated that Samsumg (with help from WYY MU et all) will fill Dell. Knda was hopind SMSG fill Dell and WYYY et al was gravy, but either way...).
... and finally, the scrambls server apparently lives. it would be sweet chaos if that thing made money, dubykays reveling in triumph, SKS inflamed that (like iTunes) he let that one get away, and the Void Collective actually seeing a cool offshoot actually be something. and it looks like eSign is toast, looks like a couda wouda that withered from neglect (and likely a shoddy custoemr experience ala WEM and pretty much everything else?) and might be best monetized by handing it over to the competition in that area, the difficulty being not surrendering rights to the Wave specific features of the platform.
... and where some culpability for the durability of the fiefdom resides. etch a sketch it baby.
... and that a cult of personalities effectively carried the votes on GG and NB speaks clearly to where the preponderance of voting shares reside. it ain't a myth. it does not bring me, currenty a long, a great deal of comfort, but perhaps it should. obviously a hostile t.o. would have its work cut out for 'em
on gross margin, wave could easily halve product price and still be in the zone the market gets goofy over.
harris' apparently first person collected rant content makes the stuff blue has been saying over the years almost charitable.
and somewhere there was a post of solms with a potential customer and SKS doing a flyby that earned a "don't bring that fool back here" or something like that. the years where so many remarked that SKS' communication vacillated between incoherent and arrogant has certainly come home to roost.
bit confused on PJS comments, almost as if he is trying to gets his spawn get reasonable. SKS has (it seems) gone completely off the tracks.
in any event, if they don't want to deal no big deal, seems to me its a sue them if they succeed thing, I don't know if one can get contingency representation in such matters.
It would be nice if those who worked so hard to control discussion and the flow of information would actually learn from this long running debacle and see the value in critical engagement, but it doesn't look like it is to be the case. Even a self-acknowledged control freak such as myself can see the folly in enforced group-think.
Oh well. So bf carries on reiterating that 2+2=4 when the discussion is about 3+4, and the group casts aside any critical consideration of the most recent meeting to dive headlong into fall is ours.
placement adjusted WAVX is now more or less in the valuation window I personally put it at this time.
Basically, the treasury is funded i.e. a runway of a few quarters, they have some revenue but not enough (the point is things to build on), there are putative revenue producing agreements that have not yet appeared on the income statement (notably Samsung) and otherwise they speak with some confidence towards the notion that the treasury is adequate to consummate a plan towards c.f.b.e.
Importantly they enjoy a massive margin in what is generally characterized as a large market and as such the equity generally enjoys rich valuaions.
As such, I like to peg the current circumstance as worth speculative investment in the 2-3x sales area. WAVX today closed at 3x sales. Prior to the placement 3x sales was more like 1.75.
3x sales represents the top edge of my widow thingy for the current state of affairs (SP $1.02-1.53).
Now it is up to the Q2 report. Should it show something resembling Dell replacement (revs can go sideways-ish if that occurs on top of Dell erosion) then that would indicate hints of plan traction, allowing a nudge of the window (be generous Dig, allow 3.5x sales in such a circumstance; SP upper edge $1.79).
Anything material that paints a comparatively clear path to c.f.b.e. gets the big promotion to north of 4x sales, that of course would change the ttm sales factor used from its current 24m to something larger, closer to 28-30m for the leading edge of that transition.
That is a good ways off, the earliest one could reasonably dream for IMO is the Q3 report ... week 2 November that would allow valuations affording a SP slightly above recent highs (not for c.f.b.e., for a comparatively clear path towards c.f.b.e).
I missed the part in all the recaps that indicated anything like this.
I did catch a bit of a goal-post move regarding govs both sides of the pond, I did read the notion that VSC would require a few Qs to sell post launch (that would make it Q2ish 2015) and so on.
Solms' comments regarding "cushions" seem a bit, uh, speculative to me. Either knows something I don't or is brimming with confidence for which there is no demonstrated basis.
Expecting a pretty grueling summer for those skipping on clouds of victory.
Maybe I am missing something.
May the pipe be with you.
old didn't work, which leaves new, which may or may not work.
It is remarkable to me how under noticed the degree (IMO) Solms held Wave's products, as positioned and packaged, in low regard. He refereed to clunkiness, neglect etc. a general not-ready-for-prime-time synopsis.
I'm feeling like I dreamed this up, but it is how I recall it.
I remember thinking, and remarking the SKS and lads couldn't be bothered with the hard work of making a coll tech a pleasant product to consume ... it was just off to the nest cool thing with a half-baked beta as a product.
I guess we will see, but this VSC is little more than packaging what was done for PwC (years ago) for normal people who may well have been interested in a clean COTS solution some time ago.
Dream a little
(provided largely to give blue something to choke on)
So according SHM report thingys
1. Wave's new VSC solutionwill launch week 3 July.
2. a large customer has VSC in trials
the dreamy thing is to do what Boeing does ...
get a launch customer, announce the product and its first customer simultaneously. The customer gets a deal and mega support, the product gets immediate pub and cred.
Ain't gonna happen, plenty of reasons for it not to, but it would be splashy.
Blue, I'm going to have to echo alea,
it seems your impression is that little was wrong at Wave ... swap out the boss, replace a few sales people and start printing large orders.
FWIW (and myself never being able to be a long-time long but more inclined to check-out and check-in weather permitting), but for what its worth you can think whatever you want, the new guy that was hired, Solms, said something completely different to your assumptions from the beginning.
Again, you may or may not accept that the new boss said flat out from the beginning that the products themselves had problems, that the products themselves needed fixing, that while he was cutting some staff he was hiring other staff to fix the products, etc.etc.etc ... in short your content is like talking to somebody stuck in a moment in time.
Consistent with that, at least according to things posted elsewhere:
1. the VSC will roll-out as a new products in July. Now, seriously, its not really new, it is re-purposing existing IP for something people want (or at least that is the plan, and again as identified and stated on day one).
2. WEM is being re-written, cause like most SKS products IMO, it is more about tech and less about the customer.
I can't make your same ole same ole mantra mesh with the new CEO coming in and saying the the sales staff sucks and the products suck, but that the underlying IP has value.
To put it more bluntly,
I expect Q2 revenue to be about $4.9m (+/- $0.3m).
I expect Q2 to report a loss of $3.2m (+/- $0.3m, with a kicker of perhaps another -$1m, the SKS severance, taking the loss to $4.2m +/- 0.3m).
I expect them to have about $10m in the bank.
The sky will fall for many, but it is what I expect, I believe it is consistent with guidance to the extent there has been guidance.
I see no evidence for any claims for numbers better than that.
Well, not unless the pennies from Samsung bundling is actually real money this soon in the rollout. One could cook up some services revs from MU I suppose.
There is more room for it to be much worse than that than there is for it to be much better than that. That room for worse is afforded by the rate that Dell goes away. In my experience Dell is not a company that dawdles clearing out legacy inventory.
Blue, it seems to me you and I (and Solms) agree a fair bit,
it is not just bad management, but a bad product ... but it does seem that Solms argues that the technology and capabilities of the IP are valuable, but that the product itself needs work.
So, in addition to changing the sales team, there was focus on changing the product. Sure, the basic code is the same, but it had been poorly purposed, and a significant portion of the effort has been to re-purpose the product.
Solms stated from the beginning this would take a few quarters.
You it seems argue that said few quarters have elapsed and the plan has failed. You may be correct.
In my opinion the second half of 2014 is what has been generally pointed to, by Solms, as the place to best measure performance. Solms has pointed out some growth in non-OEM sales (critical of course given that the core OEM is simply clearing out inventory in the conclusion of thier relationship w/Wave) but largely evidence of turnaround is scant.
It seem that you are timing this from a date of hire, I am working more from statements and when those statements were made. It appears to me that the first couple of months was the expected power struggles, shuffling, firings, a lawsuit threat from Berger and so on - the midst from which you seem to have expected more or less sudden sales.
It seems to me that the preponderance of the structural changes in management and product profiling occurred - publicly at least - in Feb-April.
Given that Solms has from the beginning said a few quarters, given that much of the reorganization played out mostly in Q1-early Q2 (according to press releases) and given that generally speaking the "few quarters" notion has been augmented with specific references to the second half of 2014, and given that the story has been largely consistent, it seems the measure of the plan and the statements is to be found in the words in the statements - the latter half of 2014.
Those words were not 'June 2014'.
Certainly, given the statements from the beginning one could easily decide that the plan is to/will take too long, in which case one presumably chooses not to invest.
Basically, I agree with you, except for timeline. I agree the old team was garbage, I agree product had problems (poorly purposed IMO, just plain crap in yours), and I agree that meaningful turnaround must occur in a timely fashion. Your timeline is apparently June 2014, mine is the timeline the new boss stated IMO from the beginning. He flat out said, IMO rather plainly, Do not expect what you, Blue, are now measuring by.
And yes, the continued erosion of Dell, a process set in motion long ago under old management, could easily mask otherwise measurable plan success. I am rather concerned about the Dell thingy, have been for a long time, but there is at least a plan in place, and adequate capital to see that plan through.
There is no doubt, this turnaround effort could easily fail, the product could easily not be sell-able in adequate volume and price.
So, from the beginning, based on statements, I expected Q1 to suck, Q2 to continue to suck but at least indicate whether anything was happening, and Q3 to demonstrate that things were happening. You appear to be operating from largely the same set of premises as I, but have chosen to define a different timeline. I don't know were you came up with that timeline, but not IMO from Solms. Indeed, IMO Solms specifically offered guidance against your timeline.
It would seem to me that the Q3 report would be a good time to chat next, Q3 will be public, much of Q4 will have past, a good chunk of the recent placement may well have been spent, and any novice bean counting such as mine should be able to determine how things are going.
well tkc, technofunkomentally speaking,
one can make an argument that it may well head higher. It did gather its footing, the fall being intimidated by the SMA 50 @1.51, an intraday pseudohammerish thingy at 1.58 scribing support (until the moment it isn't) all with a pretty clear goal of reacquiring the SMA20 - and the placement price. it was trying to do a variation of a cupandhandle apr-15 to may23, in this case the dented cup and handle variation, but the handle was too strong and then the brew got diluted.
i'm going with 60/40 it crosses SMA50 before SMA20(bearish on that) but going 80/20 it hits placement price before the 200SMA ... i.e. kinda of leaning towards the fabled buying opportunity. it of course runs the risk of a stagflation cross under the SMA50 in which case it likely returns to the corkscrew formation - confirmation of the corkscrew is manifest/confirmed with rancour in DDland.
etch-a-sketch the whole post if it closes under 1.6
tkc, fwiw,
If indeed the placement has been shorted/covered/disposed, then at least in theory, the effects of dilution have been absorbed. The alternative, that a significant amount of the placement is long (in the participants hands) then that would to me represent an overhang. Were it I, I would want to lose those shares and sit on the warrants. It may well be a mixture, in which case I would expect a capping of any sexy news spike while placement participants clear out their exposure.
totally random OT musing: I do most of my speculation in biotech, and a holding of mine (NVAX) recently did a somewhat unexpected placement of more than 10% outstanding at a discount similar to WAVX (should one call it a discount, above comparatively recent prices but sig % below very recent). Placement was at $4 when the SP was $5. It raised $100m, but they had $100m in the bank - hence the somewhat unexpected nature. in this case the SP fell to 4.15 and is now at 4.60ish. Point is in this case it seems the placement may well have been a bit underpriced. (although there are no warrants). NVAX is a classic developmental biotech (no product, massive expenses, all sorts of upside) but with a twist. The gov funds a significant component of their R&D (a BARDA agreement, many tens of millions$ that they book as revenue) - basically their platform may well be the best for rapid response to a nasty pandemic, they are a vaccine developer, so the gov chucks money their way. A very similar scenario played out in BCRX. Apparently I am basically a monkey who follows anything with an "X" in the ticker.
Its kinda almost a stock now,
1. the ATM is gone
2. there is a considerable period where current WAVX participants can expect no dilution
3. the prior admin is retired
4. the goals (measurable ones) are stated.
The fly in the ointment is Dell. The rate of dell erosion.
Other than that it is a rather simple matter, can they successfully execute the plan within the time frames current resources allow. The current resources could get undercut by dramatic/rapid Dell erosion. The wildcard is Samsung pennies bundling and whether hat can ease the transition towards planned enterprise sales.
The ASM should be fun, but the next Qrep is where the Dell/Samsung numbers are which may indicate how much runway the placement bought.
but for the most part, a person can buy/sell WAVX and mostly know what they are buying. Prior to the admin change, the placement, and scuttling the ATM one really was taxed to well-define what they were buying/selling.
I'm a flip flopper on this.
The short interest numbers as published so far are not adequate to absorb the placement in advance - a net +600k shares from the prior period and a measly net +400 versus the month ago short interest. Obviously numbers for the Jun15 settlement might indicate a different story - or not. One could short into the volume around the placement with perhaps some covering on the 12. Covering after the 12th would not settle before the short report, it would in theory become apparent in the next report.
Obviously, were one to have shorted at/near/above the placement price then slower unwinding from the box may be occurring, but again the coming short report would reflect that.
When one looks at the price volume, it seems NW has a point. The price quite plainly did not collapse in the 'somebody knows something' fashion prior to the placement/announcement. That has happened before quit obviously, perhaps to the detriment of the final placement price.
The volume leading into the placement could support shorting against the box, but that runs into the supply/demand problem the ATM or anything else faces .... its hard to imagine the SP holding with 5m new shares(short) stepping all over the bid. So I'm going to go with NW. There was now doubt some hedged/shorted component to the placement, but nothing paints the ridiculously obvious picture of price/volume/placement disposition that has been observed before.
On the parasite thing, I'm pretty firmly in the camp that the ATM simply could not have raised that amount of money at that price, I believe such efforts could have easily battered the price well below where it currently is - that the lack of ATM use is the only thing that allowed the price increase of the last 75 days. This is the role that private placements fill.
o.k., looking at the volume,
it seems there was adequate volume to move the preponderance of the placement in the preceding week or so. From the whisperwire and over the years there is evidence that existing Wavoids are among the participants in placements. In that case a short-against-the-box effort is not required, one simply sells from inventory at prices near or above the placement price to net out to zero change in position with warrants in the back pocket.
Perhaps there is some hangover as well, and then it is just a matter of what one accepts for the price for the 5 year option with a 1.90 strike (the warrants).
The price has seemed rather inelastic in the mid 1.6s, perhaps this represents unwinding of of placement shares at a modest loss for those who do not maintain an inventory of WAVX shares to predispose.
so far the short term effects are comparatively neutral re: WAVX total mcap. The company was valued at around 75m on the 20SMA before the placement, it is value at about 75m after the placement, a near 1:1 correspondence to the dilution amount occurred.
correct, but missing the point. If the current financial condition is blocking sales, then dilute you must.
I know I was struggling with valuations a day ago and was hoping+praying they were using the ATM or something. I just could not look at the enchilada and feel good about it. I feel much much better now. They moved a truckload of shares at 1.90, they could even withstand very rapid dell erosion (which I have been fearing) and still get to the other side of "the plan". Now it just comes down to the plan. dell was 2m in revs last Q, deficit runs around 1.5-2m, call the whole thing 4m if dell goes poof.
The plan (in my vision thingy) is for
Samsung to replace some of Dell. In Q3 it would be cool to get $1m but obviously have no idea at all, in a crazy mood I will draw a line with two points, in a stupid crazy mood with one point, currently there are zero points - so I like $1m Samsung Q3.
Then some organic growth of the small stuff. +250k in Q3.
Then, of course, the larger non-OEM carrot thingy's (govs both sides of the pond, all these VSC carrots) ... +$2.75m Q3.
It is acceptable for all of that to be Q4. but those plan thingy's add up to $4m, and that at first blush would constitute cfbe on the backs of an (annualized of same Q not ttm) 32m revs.
The state-able changes in cash flow, coupled to at least some cash on the balance sheet could afford a decent P:S.
It looks much more plausible than it did a day ago from a lights on perspective and immeasurably better than it did a short while ago when they were staring at a 1/3rd rule (do people even remember these things!@#!@#???) and a months worth of cash.
like it.
basically. and while long term investors loathe the warrants, the fewer the warrants the lower the price would have been. I'm not sure they could have gotten anything resembling a decent price (over say 1.35) without the warrant attachment. This deal is all about the warrants to the placement investors (IMO). Some profits have likely been locked in so that is not entirely the case, and I haven't followed the options market which obviously could normally play a big role in any strategy involving a placement this size, but on glance the options market seems rather thin and illiquid for WAVX. Any notion that shorting has been used to lock in the preponderance of this placement runs into the same problem that the ATM had - WAVX was not fit to take 5m in share supply north of $2 regardless of whether that supply was the ATM or the more difficult to acquire short shares. This was a warrants deal. Wave essentially printed a ton of shares at the market, the cost of doing business being the warrants.
and that is from one who yesterday said WAVX was "a tad overvalued"
$1.90 is a good price, and there is proof.
While it is fanciful to presume that a company losing money hand over fist with an empty treasury and a massive negative cash-flow that briefly rallies to a 52-week high on the basis of little more than hope about new management can then somehow print more than 10% of the company in the form of new shares and sneak them into the market at this 52-week high (ATM) or get a placement at this 52-week high (no discount) is great fun, but the notion reflects a fundamental lack of information or understanding regarding financial markets.
Each and every day of this brief rally is punctuated by episodes of significant share price vulnerability; indeed many here have remarked that they are trading the swings. To pretend that one can assemble a placement based on the peaks of those swings, or even the valleys of a very short lived rally is again a reflection of a fundamental lack of information or understanding regarding financial markets.
$1.9 is a good price, indeed it is a great price. Why is that? Because right here right now any person can buy shares AT A DISCOUNT to $1.90. That WAVX SP fell so completely below the placement price is a clear demonstration of fact, that the SP was tenuous at best. Management succeeded in locking in a price that when compared to any reasonable window of recent prices or indeed the current price can only be described as a good deal. When a placement occurs at a discount AND the price fails to fall to the level of the placement price THEN a placement is underpriced. LET ME SAY THAT AGAIN SLOWLY: IF the price does not fall to a level at or below the placement THEN then the placement was underpriced.
If the $1.9 price was such a steal … then it would seem folks here should be tripping over themselves to buy at a much better price than the private investors of the placement enjoyed.
Nothing in recent SP/Volume activity supports the notion that PP profits were locked in. Some? Sure. But plenty of new equity and the millions of dollars that printed it are in the red.
Wave’s fundamentals clearly demonstrated a clear need for some real money. Not some sort of $2m deal – that is only a bandaid. Wave’s current cash-flow statement is propped up mostly by one item that the company says is going away – soon. (dell).
Folks opine for the ATM instead …. The ONLY reason the SP is where it is at is because they laid off the ATM. They parked the ATM, built hope, and locked in a PP at $1.9.
Back up a month or two and tell me it was anything but genius. Real genius, not the phantom kind. Now, only now, can one invest in WAVX and know the doors will be open long enough for the stated plan to play out. So buy, sell, or …
(and yes, there are the warrants. the PP is stated to close June 17 .... at a PREMIUM to today's trading price. the warrants are the price for that PREMIUM)
nah, there is time,
if you are hopeful to flip on ASM optimism .... the Dell numbers come out second week in August.
never been a buying opportunity type of Wavoid,
but I'm thinkin that here. The PP is 10% underwater ($10m under by %10 is some coin). Yes, they bought the warrants with that 10%, but it is still in the red.
I'm inclined to think that the company expects some new business, but am also inclined to think that folks underestimate how much new business they need. I'm inclined to think that if instead of this they announced a $1.5m deal that folks would be calling for $5 (or more) a share, but $1.5m is pennies. Dell revs could easily drop that much this Q. Historically Dell was about inventory control. They've gone private. Solms said ongoing Dell revs was clearing out legacy inventory. Private Dell is going to cut bait and clear the shelves (IMO).
Well run micro caps sell PPs into periods of comparative strength, do so in firm anticipation of noteworthy news in the following weeks (not months) and folks lick their wounds over the dilution and move on.
$1.7 at 10% below the placement seems like a decent entry point for a modest amount of speculative investment.