Any resemblance between my personility and this guys is only circumstantial:from si
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To:Sam Citron who wrote (90)
From: Friday, Dec 12, 2003 7:00 PM
Respond to of 92
Welcome to the foggy border between the microcap world and the small cap world, Sam!
I thought that NENG mishandled a lousy hand dealt by some useless idiots at EMC who decided they wanted to showcase their supply line clout on the same day they decided to move up the DCTM acquisition date and revised its guidance upwards.
NENG disclosed that it brought down Centera gross margin from 24% to 20% at EMC's behest in the 3Q2003 earnings call when Centera accounted for nearly 50% of sales. It again disclosed the long-planned change of its Centera model to a consignment model during the 4Q2003 conference call when Centera sales dipped sequentially. For some reason, instead of disclosing the most recent pricing concession in the next earnings call, they decided to issue a vague press release covering a part of the business (EMC-qualified HBAs) which accounted for less than 15% of 2003 sales and which was slated to go down to less than 10% of sales in 2004. As a result, they created the perception that the margins on the entire EMC business, including Centera, were going down. This, of course, was not true, but that perception was apparently enough to wash out NENG's ownership base, particularly the institutions that couldn't own microcaps or stocks with market caps of less than $250M, a process that should be just about done.
I'm going to chalk this up to NENG's inexperience. There's a very good chance that the EMC/Centera business, the Microsoft Exchange business and the Nortel business will more than make up for this fiasco. ATA drives are currently single-sourced from Maxtor and the increase in ATA-drive suppliers (read: lower disk drive prices) will also make some margin points available to NENG. I do think NENG needs to add more experienced hands to its IR department to start to rebuild its ownership base.
AI
