Saturday, June 7, 2008

Weekly recap - nearing 52 wk high

The stock continued its rise this week despite the downturn in overall markets. UT stock closed at $5.53, up 0.73 cents or 15% on above average volume. The stock has now doubled year to date and up 148% from the all-time low of $2.23 set on March 17, 2007. On my last post, I listed down possible reasons for the rise. Aside from the analyst meeting next week, there were no other direct PRs from the company. Some of the related news that I read over the week were the following:

PAS roaming - Techbroker posted a link on CT planning PAS roaming throughout the country. PAS roaming has been discussed for years and there were already some unofficial usage previously but now that the telecom consolidation has been set, PAS roaming could become more "official" and help promote and extend PAS revenue streams.

Icahn names price for Yahoo/Microsoft merger - Its amazing that Icahn can become so frustrated after buying his yahoo stake for $25 with the sole purpose of scalping a quick $9/share. If I was a yahoo shareholder, I would side with Icahn only because I think yahoo would be hard pressed to get to $35 on their own in the next few years. The thought of communicating with an Icahn (or someone else) regarding UTStarcom entered the minds of a lot of frustrated UT investors early this year but it was simply not the right time even when the stock was in the $2s.

Proxy statement - I've talked to some shareholders and my recommendation would be to withold votes for the two directors but agree to the employee option repricing.

Verizon's purchase of Alltel - UT supplies handsets to both companies. Verizon Wireless has 67.2 million subscribers and the combined company would have 80.4 million subscribers. From UTs website, UT supplies only 1 phone to Alltel but up to 16 to Verizon Wireless (not to mention the data cards/smart phones). Overall, this should be a positive to UTs personal communications division and could be another reason the stock went up this week.

I'll end the weekly posting by commenting on the stock price again. The stock has recently gone up seven straight days and people are wary of chasing the stock and are looking for resistance points. The fact of the matter is the upcoming quarters are going to be really good ones for the company and valuation is very reasonable even with the run-up. The quick earnings projections I have done a few posts ago show that estimates are very conservative and positive "surprises" are inevitable. Diverstitures, analyst and shareholder meetings are coming soon as well so any "pullback" should be relatively swift. On top of all the positive factors from the last post, you have the shares underowned and most of the main stream investment community will wait for a few quarters of confirmation. In short, its a good environment to be long the stock. In a few days, the 52 wk high will be under $6 and UT may indeed be at the 52 wk high. In this market, that would be an incredible achievement specially when the company is still working through a bunch of issues and not yet profitable.

Have a good rest of the weekend to everyone. Looking forward to the analyst meeting next week and possibly a 52 wk high.

1 comment:

tim_94305 said...

Correction - Low was set on March 17, 2008.