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Lindon - I was thinking the same thing but Corning being a potential buyer for the CIT division from CAR ... the failures here are clearly market related (timing of peoducts integrating this technology, etc) and also the fact that CAR are a small player trying to play in a big global tech sandbox - IMO they are in way over their heads. If someone bigger was behind the scenes, things might move more quickly?
Thanks Lindon - very interesting info and helps identify the problem here with all this. Sounds like CAR/Xsense need to work on costs but at least they have the superior solution - there has to be a market for that, especially with the higher end OEMs. Agree this is something that will take time - changes this big in tech don't happen quickly. The partnership with Corning is reassuring as they could always get involved in scaling production and perhaps assisting in production costs (?) I think you mentioned this as well yesterday ...
Hi Lindon - to clarify, by 'quality' I am referring to Xsense/CAR having a superior quality product worth paying more for ... are you in agreement with that or do you think the Asian competition has an equal product in terms of quality/value and therefore the only differentiator or issue is price?
Thanks Lindon - I would add that I don't think it's ONLY a matter of price. Are the competition as good as Xsense? Will it result in the same quality product as one made with Xsense? For Tier 1 products (Samsung, Apple, etc) quality DOES matter, even if it is more costly. Maybe this is what CAR means about the marketplace becoming more settled over 2014? This is a hard one to call right here -- either CAR is a massive bargain here in the £1.20s or it is priced for a very grim 'new reality'.
So ATML said there were delays in contract wins due to Asian competitors but they also said they hadn't lost these deals - they were just taking longer to close and there were pricing pressure issues that weren't helping either ... can we believe them? Right now CAR's stock is trading as if these deals are lost & there will not be any in the future - very grim reality or overreaction by the market - anyone?
Hi Lindon - if you can't buy the shares today at £130 with a reasonable PE and trading at <1x revenues then when can you buy ;) .... as you can see, I've moved to Strong Buy as the share price discounts Xsense entirely and I believe there will be a market for the product and that even if profit potential has been reduced due to pricing etc, there's still some value. One big Xsense win and the stock woudl explode up so IMO, best to be in beforehand. As far as further bad news hitting the shares, what else could there really be except debt issuance (scary possibility) and the extinction/writedown of CIT (unlikely but possible) ... ?
Lindon - not sure I'd describe it as a "huge" win esepcailyl with the stock as weak as it is and the ATML CEO not even getting the product right, but every little helps. CAR need to get soem damage control advice from the City and come up with a story and a plan by June 30. No matter what state teh company is in, any stock that gets crushed this much in a few months is in big, big trouble. Let's hope CAR are sorting it out. Xsense must have a future and CAR shoudl be able to benefit ... to what degree is unknown but they need to quantify the business opportunity in realistic terms.
http://news.stv.tv/west-central/270536-fears-for-up-to-100-jobs-as-carclo-plastics-plant-in-harthill-closes/ ......... Employees at Carclo Technical Plastics in Harthill, North Lanarkshire were told on Thursday the plant would close at an unspecified date before December 2014. The injection moulding factory makes plastic parts for the automotive industry and other sectors. A letter to workers said the Harthill plant had been running at a loss for three years and was "unlikely to return to profitability in the near future." An employee at the site said around 100 job losses were expected over the coming months. The worker, who did not wish to be named, said: "We thought our jobs were safe and this would never come. We've been pretty busy and there have been lots of orders. "People aren't happy, they've just put up this notice and they've not told us anything. "We're not getting any answers from management." The job losses would "affect the local community," he said. The process of closing the plant is expected to continue until December 2014 as discussions are held with the firm's customers and workers' representatives. The group also owns plants in Buckingham and Shanghai. A spokesman for the company said: "Carclo Technical Plastics ltd confirms that a consultation process has commenced in relation to the possible closure of the Harthill facility. "The facility has been loss making for a number of years and, after a detailed analysis of possible improvements to the facility's performance the company's management has concluded that the facility will be unable to return to profitability in the foreseeable future. "Our key concern is to support our employees at Harthill at this difficult time."
very disappointing and definitely should make all question the quality of the management here. still think Xsense has potential and the rest of the business should report well in June, so not the best time to throw in the towel but anyone could be forgiven for getting out on any share price bumps in the future. someone should definitely hold this management team accountable now.
Sorry, just to complete the thought ... IMO if one looks at the stock price today AND *if* one believes Xsense has some level of success in the future, then buying CAR is a good move. This appears to be a case where the market is ignoring the potential of CAR based on the previous track record of disappointing news, thus the shares are conceivably trading at a discount (which is when you want to buy them). Perhaps the market was too optimistic in the first place about the pace of adoption ... again, IMO Xsense full-scale product releases could still be 1-2 years away given all the issues from design win to being in stores. It also requires a fundamental change to device manufacturing and those kind changes take a long time, testing, validation and investment. That's the bull case as I see it at the moment, JMHO ...
Lindon ... agree with your take here; I think the product cycle on Xsense could still be 1-2 years away. In between now and then there may be announcements about releases/partners, so don't think we need to wait that long to get a sense of how Xsense adoption is going. RIght now, IMO, the stock trades as if Xsense is a complete failure. If we get a decent report in June regarding the rest of the business, then the stock is a fair price, maybe even a buy on that alone. I understand your points about additional funding needs but those aside (mainly because CAR haven't said they need it) we have a stock trading around 1x revenue that pays a dividend an is profitable. I am more confident now that with ATML pushing Xsense more (including basing their comp plans on success rates) and the continued partnership with Corning, one has to believe Xsense will have some wins going forward.
Strange that there has been so little movement in CAR given the Corning news and Xsense compensation news at ATML. One way to interpret this is that the market simply doesn't care or believe the CAR story anymore - only deals/revenues will matter. At the same time, this may prove an opportune time to get into/add to CAR while the share price seems not to include any upside in Xsense, despite the recent news. Hmmm ...
Lindon ... thanks for clearing that up a bit; uh-oh, doesn't sound good ... hmmm. Agree, if this goes into loss making territory and/or debt issuance, we are in trouble for sure in the short term. Still think that would contradict their Jan 22 statement, but that may just be looking for a silver lining ...
hi Lindon ... your post decidedly more bearish in tone than earlier posts where you've appeared more optimistic based on latest medical device approvals and the strength in other areas of the business, aside from Xsense. From CAR's Jan-22-2014 statement, there aren't any warnings about issues regarding debt, CAPEX or performance in the other areas of the business (see below). Is suppose they could be lying or maybe you know of some new info that has emerged since this statement? --------CAR JAN 22, 2014-----------http://otp.investis.com/clients/uk/carclo-diagnostic/rns/regulatory-story.aspx?cid=429&newsid=388040 -------The group's Technical Plastics, LED Technologies and Precision Engineering businesses are all performing in line with the board's expectations. Technical Plastics has been awarded several new programs during the year and further significant program awards are anticipated within the next few months as this business enters a growth phase. Within the LED Technologies Division we have secured new supercar lighting programs and anticipate further awards early in the next financial year which will drive significant growth in this specialist design and manufacturing business. Sales within the division's LED Optics are also growing well. Precision Engineering continues to perform well and has maintained its prior year performance. Progress at Carclo Diagnostic Solutions is as anticipated and we are on track to deliver working product prior to our year end for the previously disclosed trial project for an Acute Kidney Injury marker with EKF Diagnostics Systems plc. The group's balance sheet is strong and its funding remains secure. The board looks forward to sales and profits progression across the group in the coming financial year.
Just an observation - the volume has vanished so think the stock sits where it is until the next piece of the story comes out (ie. earnings, Xsense, projections, etc); maybe something between now and June or maybe we have to wait. Obviously it's impossible to tell whether the next piece of the story is good or bad, but if earnings are good and there is some positive development around Xsense, the shares should jump quite a bit as it appears all the sellers are out now in anticipation of bad news. IF things turn around here, there will be a rush to get back in. I doubt more bad news damages the stock too much from here because (a.) it trades at 1x revenue and (b.) it has already been beaten down and sold off on bad news. JMHO,
I think these articles may have already been posted/discussed here, but if not they are worth a read. They confirm that bezel free products are clearly the next phase in mobile tech at these 2 mobile giants. It would be nice to think CAR/XSense (or maybe CAR/Corning ?) are involved - no way of knowing and perhaps nothing to do with CAR, but if nothing else, there will be some future for this technology if AAPL & Samsung are using it in their next generation product schedules ... << http://www.koreaherald.com/view.php?ud=20140211001246 >> & <<http://wallstcheatsheet.com/technology/apple/leaked-images-of-apples-iphone-6-suggest-bezel-free-design.html/?ref=YF >>
IMO only - the share price now reflects a fair price for the rest of the business (which is growing) and gives almost no valuation to CIT. The main question is whether (a) CIT is finished before even getting out the gate? or (b) this is a combination of bad communications by the companies & a longer than expected sales cycle. If it is (b) then the shares are a buy.
Hi Lindon - thanks for all your posts here, very informative and on target. Can't tell if you are still a 100% believer in CAR after this recent debacle or more of a hopeful long, stuck in the stock and searching for good news amongst the rubble as I suspect most are at this point. The clue should have been in their 1st warning that things were not panning out as originally hyped by CAR & ATML. So where to from here? Like you say, the rest of the company is doing well and they are trading at a multiple now that doesn't value CIT much at all, so one could say the shares are currently priced right, limiting downside. IMO Xsense will not be as big as everyone thought, the competition is more potent than everyone thought and CAR shareholders are stuck in negative equity for the near future (less than 1 year). We know Xense has become Windows-certified and got public recognition at CES. I suspect the sales do happen over time (next year or two) with some Windows devices, but unless they do something big with Corning or AAPL/Samsung (neither of which appears likely) then expectations must be tempered. There are still other markets for CIT that may prove profitable over the long term (3-5 years) such as automotive, consumer electronic devices other than computers/phones, and even industrial infrastructure. It's going to be years and they will have to share with others like Unipixell (Kodak), Cambrios (3M, I believe) and I question the size of the opportunity for CAR being tied to ATML. GLA.
Besides Unipixel there's Cambrios, who seem to have been making strides lately and are in Lenovo already: http://www.cambrios.com/news What happened to all these OEM deals from May-2013 release, did they lie? http://www.iii.co.uk/stockmarketwire/90360/carclo-growth-prospects-substantial ATML / CAR need to get themselves sorted and quickly ... "In addition, XSense was recently selected for multiple new designs with several tier-one OEMs. "Furthermore, we are engaged in active discussions with major ecosystem partners to develop reference designs and to ensure that substantial capacity is available to support the forecasted roll-out of large screen systems.