Wednesday, October 8, 2008

Liquidity, frozen asset, lack of confidence, bailout

Am I talking about the US banks, economy, or the fed actions? No, its the sorry situation with UT stock. The stock closed at an all-time low of $2.25 after hitting an even lower intra-day low of $2.15. I could talk about all the "assets" and value the company has but this situation is all about liquidity. The company understands liquidity (see last year) but here is an example of shareholder liquidity problems TODAY. I was talking with an institutional investor as this was unfolding and we muttered something like, there is definitely a determined seller today that was dumping a lot of shares, dropping the price 10 cents at a time. I then get a call from another institutional investor mentioning one of their clients on margin had to dump 700k shares! With trading volume averaging less than one million, it doesn't take a genius to realize it was going down hard. At some time this morning, at about 800k share volume, I was amazed to see the market cap get clipped by $47m on about $2m worth of trading. Brutal. This is the flip side of the 700k share buy that gapped the stock up to $3.37 a couple of Fridays ago.

The company has touted their $324m net cash position, their growth potential, their great technology, their "near term goal" of getting to proftiability, their goal of enhancing share holder value, and yet the stock makes another all-time low. Its unfortunate that shareholders have no recourse but to unload at these levels while management tinkers around their profitability timing and holds on to shareholder cash. While there is no guarantee the share price will go up with a buyback, it will provide confidence that is as beneficial as the return on cash. Seriously, what is the company waiting for? A $1 handle? You have got to be kidding me....That 2009 forecast coming up better be a good one or else......

One last note: One good thing about the credit crisis and all the failed strategic plans of companies all around. Executives nowadays have so many examples right in front of them on what NOT to do. Maybe the SEC/Fed should "force" UT to sell itself and/or find a merger partner. It can't be much worse than this.

Good luck everyone.


Anonymous said... can bet your head before you jump off the bridge, that it will get worse...with those (gone or hiding?) criminal utstarcom management clowns!

keep on dreaming about utsi BoD crooks buying back their pile of shit=shares at even 1 dollar...

no real contracts, no nothing for five years now - just you don`t get it

ps: where is "ceo" blackmore? gone as barton? dead due to age? or playing golf (most likely)!

Anonymous said...

The Board ought to at least act upon and announce a resolution that management, at their discretion and in the best interest of shareowners, has been granted authority to buy a certain number of shares over some stated period of time. Management would not even have to initiate the buy back program for this gesture to have a positive effect on the stock price. It would send a message of confidence from the Board to the market and shorts would now know that management has authority to pull the trigger whenever they deem appropriate.