March Networks Share Discussion Threads

[slogsweep] 25/4/2007 14:56

I have a 1000 or so left so you're not alone, don't feel inclined to add yet but still on watch list

[milesy] 25/4/2007 14:50

Andy - just watching occasionally, no longer hold.

[milesy] 01/3/2007 09:54

LC - finally got out a while ago having thankfully top sliced when the share price was healthier. Think they'll come good again once the international expansion starts to contribute, whenever that is, but seems in limbo at present.

Not sure if the statement re WM is saying they're no longer a customer, or just that for FY2008 MNW aren't factoring anything in due to the uncertainty. Perhaps that'll be clarified in the web call.

Have kept watch as it's still a major growth market and MNW have good technology to address it...could prove to be a good LTBH at current levels and Sir Tel is a canny operator.

[lordcoco] 01/3/2007 08:14

At first glance, results look to be ahead of expectations both in revs and eps. Confused beacause they are stating 3 month eps ahead of their full year revised expectations - perhaps this is indicative of negative earnings to come once or now that Walmart contracts have been fully deployed and terminated.

"The Company is planning to generate sufficient revenue in fiscal 2008 to achieve breakeven earnings before income taxes at the current operating expense level without any revenue contribution from its current largest customer."

I think this backs this up.

Little else to go on. I expect they'll be upbeat during the cc, again. They really need to start coming up with figures from overseas rather than their continual hints that they are "really excited" about this and that. Was amazed to see they had no presence at this years IIPSEC despite all their talk about europe and the UK, biggest international show of IP in security (attended by virtually everyone) and they fail to turn up????

I have a very small amount (750) which are firmly bottom drawered out of interest to see if they can turn the ship around. Been quite a ride with MNW and, if nothing else, I've learned a few valuable lessons. Anyone still holding?

[lordcoco] 16/1/2007 10:13

Interview with Peter Strom on RobTV yesterday for anyone interested:



Huge volume (2.5m) on TSX last night!

Still trying to work out the figures, they stated in the call that their adjustments purely reflected the change in orders from WM, therefore it looks like a 20% drop in revs has had a knock on of 60% drop in earnings, due to their level of gearing I'm assuming.

They now expect c. 30m in revs for the next two quarters (49m in Q1/Q2), we being some way into Q3 already, and this could result in negative earnings for the period. If they have being getting revs from WM this Q and perhaps a small amount for Q4, then what happens when WM dries up completely? Given their investment year and increase in costs it looks like they are heading firmly into negative earnings territory going forward for the foreseeable future even if they continue to increase revs from non WM business - the gap will simply be too big to fill.

It could be a classic squeeze from WM, they are notorious for doing this, even so they have been right royaly shafted and that has always been the risk when +50% of revs come from a powerul customer who has absolutely no qualms about riding roughshod over suppliers.

[jswjsw] 15/1/2007 15:00

Bye guys - nice knowing you(!)
I've moved into INS ...

[lordcoco] 15/1/2007 14:14

I think it best too to write off Walmart for now.

The second source is not news, it was made clear last results, the shock, and I think it is a shock to the team, is that they have been cut so drastically.

I agree, they sounded downbeat, perhaps not so suprising though.

[dgriffin100] 15/1/2007 14:10

I think that the management lack visability, but suspect the worst. It is clear that the orders have stopped, and whilst the discussion is limited to the impact on the current financial year (because they have never provided longer term projections), the possibility exists that the orders will never restart. They mentioned that new orders would be accompanied by significant sales effort - i.e. it is not just a question of turning on the taps after a break.

There was reference to a second source for systems, and it is assumed to be Verint.

So all a bit unclear, but one to avoid for the moment I feel. At this precise moment the workforce have just heard that some sort of cost savings will be required as a result in the loss of revenue and the gross margin erosion because of a %age shift to transportation markets.

The management also sounded quite downbeat, in contrast to their usual performance.

[lordcoco] 15/1/2007 14:09

"They clearly don't like the systems."

I didn't come away with that view. Could be many reasons why Walmart have moved in this way, they are notorious for putting the squeeze on their suppliers. Their customer satisfaction rate has always been up in the 90's, as walmart make/made up such a high % of their customers this will have included them.

gross margins going to take knock as the mix will now be toward lower margin transport sector.

They had "no indication" as to why Walmart cutorders, they still have ongoing revs from their current deployment to them (1400 stores out of 4000) maintenance, software etc.

Possible inventory issue?

Happy with rest of business, though obviously not a great deal of visibilty currently there either.

Head count - 230.

[jswjsw] 15/1/2007 14:00

Conf call: CEO says it's all down to WalMart. They've just cancelled all the orders. Ditching MNW altogether can't be far off, therefore. They clearly don't like the systems - AND there is a competitor. Hence the almost certain complete termination of the Walmart deal. It's a little odd, since Walmart haven't yet done this - maybe just to keep maintenance deals ...
The Bombardier contract is not affected.
The only positive is an attempt to restructure cost-base, but this is probably going to be later in 07.
The price is therefore fair, IMHO, at between 480 & 580p.

[lordcoco] 15/1/2007 13:36

Listening to cc - *nothing* in pipeline from Walmart for rest of Q3 and Q4.

[jswjsw] 15/1/2007 11:58

Fraid I now don't agree. COnf call may come up with something, but I am now out.

[jswjsw] 15/1/2007 11:17

Hmm. Completed analysis now & I fear I am coming back to SPEC12's side.
Problem is, I don't think the 16 multiple will maintain now.
Even if it does, 34 cents eps (top end!) gives 240p. Below about
$100m CAD the margins dissolve like alka seltzer.
They may have raised their cash position - that's one important question
for the conf call., and must still have at least 240p in cash.
480p? There's 90p of hope, therefore. The conf needs to
add a pound's worth of 'icing'.
Oh dear ... I may be writing this off now, unless the CEO brings rabbits ...

[lordcoco] 15/1/2007 10:38

Still "believing" in March is going to be key in the next few days/hours. Strip out Walmart and you still have a business that has excellent prospects imo, too many reference customers to suggest that their products are somehow flawed, which ultimately will decide whether they suceed or not.

If the belief falters and the company is to be valued solely as a multiple of their eps then the price still looks too high (which is a real danger hence my figure earlier), if market still sees value and prospects in the business outside of Walmart (which at present there is no reason not to - though clarity on the revised figures is needed) then it will be valued differently, not just as a multiple of eps - though not sure how to go about working that out - finger in the air job!

Am going to sit tight till the call and see what crops up, may be an opportunity before TSX opens?

During the last call they mentioned they had has some problems with the hard drives in some of their products, they'd picked up on it early they said, before it became a serious issue and the products in question were replaced. I think they said the liability lay with their suppliers, wondering now if they have been hit with the costs of this?

[edmondj] 15/1/2007 10:25

What goes up like a rocket is liable to fall like a stick!

Especially flotations, with early investors taking profits.

Same old market moral, whatever sector/era.

[spec12] 15/1/2007 10:10

If you still believe in this sector but not with MNW. Have a look at Indigivision (IND) www.indigovision.com

[lordcoco] 15/1/2007 10:05

Anyone else got a view on the eps figures?? They've done 25c already this year, now predicting 26-34 for the full year - doesn't make a great deal of sense to me. They'd hinted that their expansion and opex/capex costs were now at an optimum last results ie they didn't expect these to increase beyond what they were at present. Having mulled it a bit, it doesn't look like, judging by only a 20% knock in revs, that all their WM busibess has gone (if it had surely this figure would be lower?), so how is it that, at worse case, they see only 1c in earnings for the remaining 2Qs?

It's an odd one JSWJSW, if you value the company on their GAAP earnings (has been much debate amongst analysts as to whether this is fair as they are still not paying any tax) and their own guidance, then their eps figures seem to say negative growth even taking into account WM news and still on a high multiple, yet their non WM appeared to have been growing and one would have thought their eps figure should therefore be higher - am I missing something? What's their cash situation at the moment?

Edit - cash at last count CN$88m.

[jswjsw] 15/1/2007 09:52

I am inclined to think that the fall is way overdone.
$80-85m CAD revenue is still in advance of '06.
So why the low eps, I wonder? Bombardier is still intact.
Its a blow - but the cool-head (!) buys starting after 9:20
may be sensible ...

[lordcoco] 15/1/2007 08:40

I agree, I don't think the business is a dead duck, I genuinely believe they have made great progress over the past couple of years and their potential to do very well from the retail and transport sectors is still very much intact. Just trying to figure how this news re WalMart results in only a 20% drop in revs yet amounts to a +60% drop in earnings and eps??

[sranmal] 15/1/2007 08:27

Which is a shame because this was once a great business and investment case (and may be again when they expand fully outside of North America).

[lordcoco] 15/1/2007 08:20

Hi sran, bit of a sorry tale isn't it? Based on the figures I dont see this as being worth much more than 400p, if that. A short would have been a good idea, I did consider it but thought I'd wait until next results to gauge the impact, too late. Worrying part is, based on their revised guidance, it doesn't exactly appear that the non WM businesses is going great guns either.

[uplighter] 15/1/2007 08:05

Mr Matthews dumped his stock only a couple of months ago and now this