Opinions
Werner Muehelemann
Enablence Technologies Inc.
ENA-X
DON'T BUY
May 28, 2008
Have a technology that is essentially fibre to the home. Seems to be better technology at lower cost. Still at the product testing part, so sales as yet. Could have good sales if it works and it becomes a leader. Investors became too bullish and that's why the stock has run up.
$1.400
Stock price when the opinion was issued
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COMMENT
Have a product that would take fibre to the home. Has a high regard for the management team for what they have achieved and where they are going. It was always 2 steps ahead of where he could get his head around valuation. Leading edge technology. A “waiting on blue skies” story.
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DON'T BUY
Able to integrate a lot of optical components onto one chip solution at very low cost. Acquiring Wave7 Optics, which potentially puts them in competition with their customers. Not sure this is going to be a successful move. Trading at 64X 09 earnings, so it is not cheap. Speculative. Below $1 would be an interesting entry point.
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DON'T BUY
Started with a single product and then made 5 acquisitions in the last year. As fibre-optic net works are built out this company, theoretically, should benefit from that. Their problem is they are not susceptible to analysis and he does not know how much money they are going to make, etc. Potentially interesting.
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COMMENT
Analysts forecasting a loss of $.16 in earnings in 2009 April year-end. Expected to improve to $.09 loss in 2010. Doesn't like investing in companies that have losses. Latest merger is going along well and they now offer a broad sweep of solutions. Looking at rural telephone companies in the US as a sweet spot to take over existing customer base. Interesting technologies.
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WATCH
New CEO is working on pulling separate units together to enable cross selling, which would be a huge advantage for them. Earnings had a loss of $0.09 in 2009, expected $0.01 in 2011 and $0.04 in 2012 giving a 17X PE, a 13% earnings growth. Watching to see how things unfold.
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DON'T BUY
Fiber optic technology right to your home, in rural areas. Young company. Not something he would normally follow, but knows the CEO. He was impressed with the way he manages his company. In this case the company had an acquisition but has not worked out the way they hoped. Still cash flow negative. He’s watching it for now.
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