Telit Communications Share Discussion Threads

[youcancallmeal] 17/11/2015 12:40

They probably start off doing it to create lovely, high headline profits to lure in investors (angels, venture capitalists and/or an IPO) for the many people who don't fully read the accounts. Once a company has taken that approach it's very difficult to stop, even if they want to, because it will superficially look like they have badly under-performed for that period.

But I'm not to fussed about the aggressive capitalisation of development costs - that's relatively easy to spot and work out, and perfectly legal. The weirdly high loans to cash is something that can't be worked out with the information in the accounts, which is why I've got in touch with them. If that can be cleared up then at this price I'd be very interested.

[joestraughan] 17/11/2015 12:34

All companies capitalise development costs that are expected to have future economic benefits. It's standard accounting practice!

[muffster] 17/11/2015 12:29

Why do these companies use these accounting practices anyway? To inflate their profits. Sad case of great story, muddied by poor accounting standards.

[treeshake] 17/11/2015 12:27

Guys I was a holder here until recently, it was the Paul Scott story that did it for me. The company looks sound but for that bit of sharp accounting.

It needs addressing and fast

[youcancallmeal] 17/11/2015 12:11

....even if I'm currently holding (I should have said).

[youcancallmeal] 17/11/2015 12:10

And in a newer industry / technology such as this the price fluctuation was always going to be greater than many other sectors. I'm normally quite happy with prices dropping as I can buy in (or more) at a good price and make more profit in the long run.

[sandeep67] 17/11/2015 12:03

Don't read to much into it Joe. When share price falls derampers and doomongers come out and p.i's get sucked. When it rises they miraculously disappear. Happens across all shares so not reading into it much. Ennismore taking a small short is opportunist at best but that's their market. They could get burned they could burn us more than today.Cat and mouse comes to mind.

[buffythebuffoon] 17/11/2015 11:59

Excellent entry point. So many muppets talking nonsense.

Buffy

[deanroberthunt] 17/11/2015 11:44

bounce back to top of falling channel imminent, from technical, so 240-250p

[youcancallmeal] 17/11/2015 11:40

Good point, Joe :)

But according to Apple's final 2015 statement their cash position is nearly 4 times that of their loans. Obviously some gearing can be useful for liquidity reasons, so some is to be expected in most (if not all) companies, but more than 100% loans to cash doesn't make sense, do you not agree?

There may well be a good reason but the question has to be asked. I've emailed their investor relations person so we'll see what they say.

A lot of Telit's loans seem to be governmental in nature (about 50% by the look of it), so maybe they are as good as 0% interest. But without knowing more it doesn't look right so it's understandable (especially in light of Globo) for people to be nervous and playing safe by selling out.

[deanroberthunt] 17/11/2015 11:39

it ain't necessarily so..........

[joestraughan] 17/11/2015 11:39

Funny how they mention a potential move to the main market with the current share price
The only way that will happen is if they sell or merge with a main listed company.

[pyglet] 17/11/2015 11:35

Down to below 134p then. Crikey.

[square1] 17/11/2015 11:26

This what Canaccord said

Based on 10x 2016 EV/ EBITDA and 20x P/E and capitalised development costs, we arrive at an average valuation of 345p. (Sierra Wireless shares now trade at 5.8x 2016 EV/EBITDA and 13.7x P/E based on Bloomberg consensus.) If we were to use the same valuation multiples, but based on earnings after expensing development costs, then 2016 Adjusted EBITDA would fall to $24.4m and Adjusted EPS would fall to 9 US cents, and average valuation would be 134p. We set our target price at 240p, based on an equal weighting of the two valuations above. We therefore downgrade our recommendation to Hold from Buy largely due to valuation. However, we expect to review our recommendation based on improvements in FCF and a potential move to the main market.

[joestraughan] 17/11/2015 11:24

Al, even Apple with its billions of cash still has large loans on its balance sheet!

[deanroberthunt] 17/11/2015 11:24

technicals look good for a long punt....macd and rsi oversold.....punt at 198p

[modform] 17/11/2015 11:23

You need your head examined if you're still holding this, as I said a few weeks ago, people in the know are selling on good news.When the company announces a contract win and the share price drops, you know It's the time to get out.I have no holding any more, my stop loss was triggered after the profit warning, so dyor and ignore my comments, and I hope I am wrong for the sake of the holders.

[stegrego] 17/11/2015 11:20

3 percent short. 90+% long.

Why even give them airtime?

Just noise.

[youcancallmeal] 17/11/2015 11:19

Note to self: ignore all brokers! ;)

[youcancallmeal] 17/11/2015 11:18

It's totally their own fault with their aggressive accountancy approaches and (in my opinion), worse, the baffling and unexplained cash/debt position I mentioned earlier.

But, as staverly as said, perhaps they don't care about that if they're paying themselves enough money anyway.

Also, even a small dividend would at least show they want to give something back to / give a damn about investors. It's a shame as I have worked in IoTs and have an affection for it; plus it's obviously got incredible growth potential.

[joestraughan] 17/11/2015 11:17

Square1 - lol! that would make them valued at half their sales value!

[muffster] 17/11/2015 11:15

No stopping this now. I got caught up in cantaccords guidance on gbo and this. Glad I sold both in time.Note to self, ignore cantaccord initial coverage

[deanroberthunt] 17/11/2015 11:13

or could it just be nothing.......