lt cap,
Yeah, I think that has to be the case: If Fallon is right, his
rep for no bs is burnised. If he's making up the Transmode
customer's not fleeing, he loses years of carefully built
credibility. The middle case seems plausible, which is still not
good for INFN, obviously.
Whatever fair value is, MKM's Genovese reducing it from buy to
hold is pretty bad in itself, as MKM was the one pounding the table
hardest. But his PT lowering to $15 really hurts.
All of this aside, the question is what to do. I'm about 40%
underwater on my position, my 2nd largest behind NOK. On the one
hand, if this is going to get resolved into a 'better story', it
seems highly unlikely that'll happen soon - Fallon will need to
'show them the money', I'd think. But it might be so beaten down
that any short strategy is a way to lock in losses. Going long here
- either one has to believe that this is overdone, or buy new
shares here, option them out, and hopefully pocket premium and
return of costs. But in covered calls, the premium is so dwarfed by
current losses, unless one really sells cc's in bulk, the returns
are probably not worth the risk. methinks. Although last time you
called a bottom when it was in the $13's you got it right and had a
nice short gain. So, the best strategy might be the one you
employed: but the shares, wait or hope for a bounce. Driver, other
than over-sold, is not clear.
I can understand your interest in what Juniper does in earnings.
Between this and CIEN, it really feels like slowdown is in the air,
and if so, as you state, 2016 will be rough. Perhaps another reason
not to go longer on the stock.
Perhaps I'm just 'shell shocked', but the best I can make of it
at this time is to close my eyes, pinch my nose, and ......wait
till next year. I think one could devise a coherent rationale for
selling and coming back in late 2016 or early 2017. But calling
moves on the stock is close to improbable, so one can be out of it
and missupdrafts easily. - altho on the fourth? hand, I cannot come
up with a driver for the stock, unless mgmt. comes out with some
positive announcements intra-quarter, which they have not done so
in my memory, except for acquistion of Transmode.
If there's a thesis other than hold and wait and wait and be
rewarded for waiting, I'd be interested in that thesis.
I swear I wasn't having an audio hallucination when I heard the
phrase 'dislodging existing (suppliers? can't recall the last
word)' in terms of mgmt speaking about where their growth can
(would?) come from.) One of the newstories I saw today said
the transcript they had was 'edited'.
I'm both glad and sorry to know I was right in my reading the CC
as very 'squishy', with specific facts that they'd stand by solidly
hard to find. And in response to one question (can't specifically
remember it) about growth, they cited nothing about their own
business, but cited 'secular growth' as the driver. For me,
that was the low point of the CC, in terms of Q and A.
I agree with you that Fallon 'coming clean' and clearing the
slate and further supporting street cred, even if painful, is the
best idea. (Would the result be worse than a 25% haircut? A 50%
haircut?) Unfortunately, the non-specificity only plays out well, I
think, if they meet and beat from here on in.
I am concerned that the sector stocks have further downside if
times appear tough for all the competitors.
At least NOK is non-reactive (trying to console myself,
lol.)
Lastly, I am mulling whether to buy some CIEN here - it has
several times 'bounced' from this level. But it might be different
this time - not only echoing from INFN's report (and INFN seemed to
have said their largest customers are N.A. - same as CIEN -
competitors for a (current) capex shrink?) And I need to look
up when Juniper reports. But with CIEN disappointing the last
couple of Q's the only real thesis I have for buying more around
$16.75 are recent, pre-INFN bounces at this lev.
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