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AuthenTec: Ripe for an Acquisition?
AuthenTec (NASDAQ: AUTH), the world’s leading provider of fingerprint sensors and solutions to the PC, Wireless and Access Control markets, released their Q1/09 earnings and held their analyst conference call May 12th after the market closed.
As I wrote on my Twitter feed, 3 of the companies in the portfolio reported last week, and all things considered, AuthenTec was not the highest on my priority list by any means.
Sure, I guess that speaks to the status of the company, and I’m seriously considering shuttering the entire position as I’ll discuss below, but for now, it looks like with AuthenTec’s huge cash position (the stock currently trades at less than the $2.31 per share in cash on hand), as well as their intellectual property (IP) and client roster, a larger company can swoop in and buy AuthenTec for pennies on the dollar, and we would get an easy double from here with no sweat.
Results this time around came in ahead of expectations and it appears that things are bottoming out, and that AuthenTec’s cost cutting measures are paying off.
The questions is, will this be enough to see the company through to the other side, or will it at least be enough for them to take advantage of their upcoming products or be acquired by another semiconductor company?
What follows is a summary of AuthenTec’s earnings announcement, conference call highlights, and my take on the company’s latest quarter and results, and what you should do if you own the stock.
AuthenTec: Cheap By Many Measures, Especially Net Net Deep Value
We’ve had quite a recovery in the market from the lows reached in March, and many semiconductor stocks have followed suit.
While AuthenTec Inc. (NASDAQ: AUTH), a maker of fingerprint sensors, is no different, even with a recovery in its stock price from the absolute abyss, AuthenTec is still trading at a close-out price.
Quite literally, AuthenTec is trading at a significant discount to its cash on hand, as well as its liquidation value taking into account all variables.
I have a special treat today as I’ll be previewing AuthenTec’s earnings and we will be joined by guest columnist Jae Jun of Old School Value with a short write-up at the end of this post breaking down AuthenTec’s current valuation and liquidation value.
In essence, we are getting the company for free at today’s prices assuming nothing changes and conditions don’t improve at all!
So what does this mean for our investment in AuthenTec as they look to report earnings on Tuesday, May 12th after the market closes?
In this post I’ll go over the important aspects that we need to be aware of before AuthenTec announces earnings and then break them down into the following parameters:
- What went right in the quarter: What were some of the positive developments that occurred within the company in the last 3 months.
- What went wrong in the quarter: What were some of the negative developments that occurred within the company in the last 3 months.
- What I want to see: All things considered, what I realistically want to see from the company as it relates to their business.
- Jae’s analysis of AuthenTec’s deep net-net value territory
- Bottom Line: What it all means, and what you should do.
AuthenTec Adapts to Slowing Business Trends, Outlook Dims
AuthenTec (NASDAQ: AUTH), the world’s leading provider of fingerprint sensors and solutions to the PC, Wireless and Access Control markets, released their Q4/2008 and full year 2008 earnings and held their analyst conference call Tuesday after the market closed.
While the 4th quarter earnings and sales were below expectations, it’s the outlook that came in light, as I had previously expected, and in order to remain solvent, AuthenTec is taking drastic measures to cut costs and staff to conserve cash, and see things through to the other side.
What follows is a summary of AuthenTec’s earnings announcement, conference call highlights, and my take on the company’s latest quarter and results, and what you should do if you own the stock.
How Will Semiconductor Slowdown Affect AuthenTec?
It’s no secret out there that the market as a whole has been taking an enormous hit, not just in terms of stock valuations and prices, but more so at the fundamental level of these companies and their deteriorating business conditions.
AuthenTec Inc. (NASDAQ: AUTH), a maker of fingerprint sensors, is no different, and in fact may be hemmed in on all sides not only via the slowdown in the semiconductor industry, as reflected in decreased consumer demand for electronics, but also from the very fact that AuthenTec’s technology is a value-added piece of equipment that is often a luxury.
In addition to this, we will have to contend with AuthenTec’s previous reports of the loss of a significant customer in the back half of 2009/2010, as well as slowing business trends because its sensors are facing increasing competition.
So what does this mean for our investment in AuthenTec as they look to report earnings on Tuesday February 15th after the market closes?
In this post I’ll go over the important aspects that we need to be aware of before AuthenTec announces earnings and then break them down into the following parameters:
- What went right in the quarter: What were some of the positive developments that occurred within the company in the last 3 months.
- What went wrong in the quarter: What were some of the negative developments that occurred within the company in the last 3 months.
- What I want to see: All things considered, what I realistically want to see from the company as it relates to their business.
- What we need to see: At the minimum, what we need to see for our investing thesis to still hold and an investment in this company to be prudent.
- What we’ll probably see: After weighing what’s been going on for the last 3 months, what we can realistically expect when they do announce their earnings.
- Bottom Line: What it all means, and what you should do.
2008 Performance In Review: Ouch!
I wanted to take some time to review the PeakStocks.com portfolio performance over the last year or so since we can use the delineation of the end of the year as a good point for looking back at my performance vs. my chosen benchmark, the Russell 2000.
So how did I do?
Well, not very good to be quite honest, but all things considered, and we’ll go over that in a bit, I feel that where the portfolio is positioned today, my results will far outweigh any market index over the long term, which is what my strategy is all about anyway.
If you don’t have the time or stomach to add to positions when they are down, and aren’t OK with losing up to 50% of the value of your portfolio, then you shouldn’t be investing in any of the companies that I recommend.
That being said, let’s take a look back at the year that was, and my performance since the inception of the PeakStocks.com model portfolio.
Read the rest of this entry »
Top 5 Stocks for December 2008
WOO-DOGGY!
Would you like some volatility to go along with your morning coffee?
Since I last came out with my top 5 stocks for November, the market’s gyrations have certainly put everyone on edge, and make buying stocks at this juncture definitely not for the faint of heart, or those with very short term investing time frames.
I recently wrote that now was a fantastic time to buy shares of companies you have been watching and where the fundamentals present an excellent risk/reward scenario.
My watch list is no different, and this month I have a broad range of stocks that I am looking at for possible inclusion into the PeakStocks.com portfolio.
These stocks enter and exit my Top 5 as constant fluctuations in both price, market conditions, and business fundamentals constantly alter the investment thesis.
Please note that my Top 5 Stocks for December aren’t yet formal recommendations.
I have more due diligence that I have to perform on them, but they are compelling enough with the research that I have done to be at the absolute top of my list, at least as of this writing.
Top 5 Stocks for November 2008
It’s been another incredible month for stocks, and especially for those on my watch list.
With rare exception, stocks of all shapes and sizes are getting pummeled and are presenting us with great buying opportunities for those with a long term investment horizon.
I recently wrote that now was a fantastic time to buy shares of companies you have been watching and where the fundamentals present an excellent risk/reward scenario.
My watch list is no different, and this month I have a broad range of stocks that I am looking at for possible inclusion into the PeakStocks.com portfolio.
These stocks enter and exit my Top 5 as constant fluctuations in both price, market conditions, and business fundamentals constantly alter the investment thesis.
Today I wanted to give you a heads up on some of the stocks that I was watching for possible inclusion into my portfolio, specifically ones that are high on my list, and most likely to be added as formal recommendations in the weeks to come as they reach desirable price points, and present wonderful opportunities for long term investors.
Please note that my Top 5 Stocks for November aren’t yet formal recommendations.
I have more due diligence that I have to perform on them, but they are compelling enough with the research that I have done to be at the absolute top of my list, at least as of this writing.
AuthenTec Q3/2008 Earnings: Not Horrible, Still a Hold
AuthenTec (NASDAQ: AUTH), the world’s leading provider of fingerprint sensors and solutions to the PC, Wireless and Access Control markets, released their Q3/2008 earnings and held their analyst conference call Thursday, October 30th after the market closed.
After the mid-quarter update that AuthenTec abruptly held, there were many questions that needed to be answered about AuthenTec’s business going forward.
While Q3’s results were ahead of expectations, AuthenTec’s guidance for Q4, coupled with their already lowered guidance for all of 2009, inclusive of a significant customer loss, still call into question whether or not AuthenTec has the viability and products to succeed without being folded into another company as part of a larger pie.
However, that being said, AuthenTec’s earnings release and subsequent conference call where decidedly upbeat in relation to their previous mid-quarter call announcing a significant customer loss as well as lowered guidance.
What follows is a summary of AuthenTec’s earnings announcement, conference call highlights, and my take on the company’s latest quarter and results, and what you should do if you own AuthenTec.
AuthenTec Earnings Preview: Now What?
Yuck.
That’s all I can say about AuthenTec right now…
After shocking the market a on September 8th with a mid-quarter “business update” the stock has cratered and sits now about 80% below previous levels.
At these prices the stock is trading below its cash on hand, and is priced for ultimate failure.
Is this warranted? Should we dump the stock now and get something instead of nothing, or is there a sliver of sound reasoning behind keeping shares for the short term?
Today we’re going to preview PeakStocks.com portfolio recommendation AuthenTec Inc. (NASDAQ: AUTH), which will be announcing their third quarter earnings and hosting their analyst conference call after the market closes on Thursday October 30, 2008.
In this post I’ll go over the important aspects that we need to be aware of before they announce earnings and then break them down into the following parameters:
- What went right in the quarter: What were some of the positive developments that occurred within the company in the last 3 months.
- What went wrong in the quarter: What were some of the negative developments that occurred within the company in the last 3 months.
- What I want to see: All things considered, what I realistically want to see from the company as it relates to their business.
- What we need to see: At the minimum, what we need to see for our investing thesis to still hold and an investment in this company to be prudent.
- What we’ll probably see: After weighing what’s been going on for the last 3 months, what we can realistically expect when they do announce their earnings.
- Bottom Line: What it all means, and what you should do.
Top 5 Stocks for October 2008
The tumultuous market has continued to beat down stocks of all shapes and sizes.
This is great news for those of us waiting on the sidelines to put new capital to work.
This month I have a broad range of stocks that I am looking at for possible inclusion into the PeakStocks.com portfolio.
These stocks enter and exit my Top 5 as constant fluctuations in both price, market conditions, and business fundamentals constantly alter the investment thesis.
Today I wanted to give you a heads up on some of the stocks that I was watching for possible inclusion into my portfolio, specifically ones that are high on my list, and most likely to be added as formal recommendations in the weeks to come as they reach desirable price points, and present wonderful opportunities for long term investors.
Please note that my Top 5 Stocks for October aren’t yet formal recommendations.
I have more due diligence that I have to perform on them, but they are compelling enough with the research that I have done to be at the absolute top of my list, at least as of this writing.
