Orckit Communications Ltd fka ORCT

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Buy Orckit on the dip, says Unterberg

19.3.06 | 14:02 By TheMarker

Buy on its weakness, CE Towbin Unterberg counsels on Orckit Communications (Nasdaq: ORCT) stock. There's no change to its story and the pullback has created opportunity.

The stock has taken a pounding since Orckit filed its fourth-quarter financials, says analyst Rich Church, partly because of weak results and partly because investors suspect the first quarter will remain relatively feeble.

Church writes that Orckit's No. 1 client is the Japanese company KDDI may be responsible for the downtick - because its fiscal year starts on April 1. Once the new fiscal year begins, he predicts that KDDI will start executing aggressive deployment plans.

Investors are also unhappy about forward transactions by Orckit's chief executive and president, Church surmises. "While management sales are often antitrust commissioner concern, we believe this particular transaction was against 420,000 options that each received in lieu of part of their salaries for 2005," he says, adding: "The options have a strike price of $27.14 per share, well above the current stock price."

He believes that ultimately each will remain with more than a million shares in Orckit.

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