Matt Hoffman of Soundview has been very high on OPWV all year. OPWV and MOT have been his wireless favorites.
He just lowered his price target to $3 from $6 and he states:
The company continues to see lengthening sales cycles, which will push sales at least into 2HC02. Openwave maintains its outlook that two-thirds of the pipeline remains intact, but is delayed. After showing signs of stabilization, providing the impetus for the original upgrade, the bookings number was not good this quarter coming in around half of last quarter when adjusted for a one-time, non-licensing-related contract. It can be fairly said that our thesis that MMS contract wins, GPRS phones with color screens, and concrete operator marketing plans for 2H02 packet data launches would help fuel a 2H02 turnaround in Openwave shares was overly optimistic. We are less clear now there will be a quick turnaround than we were when we made the upgrade at $5, but with the stock now trading at a discount to cash per share and the market for the company’s products only getting closer, we are sticking to our rating.
He also states:
We appreciate Openwave’s more complete disclosure this quarter, providing bookings, and the much-sought-after infrastructure and application revenue metrics now in its report. When things start to turn, we believe the improved disclosure will help win back investors. Backlog and bookings were both up sequentially, however, as we indicated above, about half of the $86 million bookings number included a one-time non-licensing-related contract. Cash exiting the June quarter was $294 million, down from $313.7 million last quarter. Operational cash burn in the quarter was $3.4 million with restructuring costs totaling $2.7 million. However, Openwave expects to exit the September quarter with $226-$241 million in cash. Expected uses of cash include $25-$30 million in operations, $20-$25 million for the acquisition of Ellipsus and SignalSoft, and $8-$13 million in other. We would like to see the company more aggressively guarding its cash in this environment, and we feel the 3%-5% decline in operating expenditure is only a tepid start. Conservatively, $226 million in cash at the end of the September quarter equals $1.30 per share.
Compete report can be accessed here:
There is an interesting article (45 days old but good) on the arena Openwave plays in here:
- Eric -