OSIIF - I'm trying to justify holding this through the year, but a little hesitant. I held it for several months already and did not want to sell given what could be viewed as depressed tax loss selling, though it has recovered a bit from the bottom.
Any idea how backlog breaks down into revenues?
In the YTD 9mos through 8/07 they stated $45.9mm in backlog, of which $15.8 will be booked as revenue during 4Q 2007 and FY 2008. Total backlog including option backlog was $70.2mm. Question would be how much of this is exercisable into revenues 4Q 07 and FY 2008. If similar ratio to firm backlog, than we are looking at option backlog of $8.4mm during the same period. In press releases it appears an additional $5.7mm of backlog was signed before 11/30/07, which should make it into their YE report. An additional $5.1mm has been booked from 11/30/07 to the current date. Most of these contracts will be booked as revenue within a year, except for $3mm which will be I assume is amortized over 3 to 4 years as stated in press release.
So for the next 5 qtrs that's $24.2mm existing total backlog + $8.8mm new contracts. Evenly distributed that's only $6.6mm of revs per quarter. I'm sure the distribution is lumpier, but looks like they need to execute more contracts to get revenue growth through the next several quarters. They've done a decent job of that over the last 3-4 months, but not exactly knocking it out of the park. To get to your $9mm figure requires some of these contracts to be loaded in the front end and will lessen the back end.
Buy, Sell, Hold? I took an indecisive action and sold half at recent levels of .4935 to net a 12% loss. If they can squeeze a couple pennies out in the next quarter than I may regret reducing my position, but I needed some money for some other investments.
