re: Foundry Q2 Revenues IncreaseExtreme loses their ass once again, CFO resigns, they drop to 30% margins, and lose millions, Their stock jumps 22% based upon this news.
Foundry jumps 4 million in revenue, increases margins close to 60%, new products shipping all over the place, 30 million profits in first half of the years. Their stock dumps on after hours.
Makes no sense. I guess marketing hype is all that matters when compared to engineering excellence.
Keep in mind that a stock price doesn't reflect the value of a company at any given period of time but rather the future expectations.
The simple explanation for what you describe is that the "market" expected Extreme to post even worse results and since they didn't the stock rallied. The reverse is true for Foundry, namely the "market" expected them to post even better results and had already factored that in to the stock price before their announcement. Once the announcement didn't live up to the pre-announcement expectations the stock adjusted downwards.
This is of course only the theory as sometimes markets are just plain irrational and it isn't worth trying to correlate the stock price to the actual fundamentals of a company such as its engineering prowess etc.
re: Foundry Q2 Revenues IncreaseSo I think Extreme is lamer than lame. But if you look at Foundry's market cap it's getting a little on the rich side. $400M in revenues and the cap is now around $2B. That's hard for people to swallow. I think people were betting on the come (no, I haven't been watching porn).
People are hopeful that Stitt will find a way to ignite Extreme again and get some momentum. I think they are dreaming.
But I also think Foundry's gonna have some problems pretty soon as well. They are losing deals to Cisco and Force10 in the high end of the market and eventually will get crushed in the mid to low end.
Still, gotta love Foundry's execution to date. Very impressive.
re: Foundry Q2 Revenues IncreaseThis is of course only the theory as sometimes markets are just plain irrational and it isn't worth trying to correlate the stock price to the actual fundamentals of a company such as its engineering prowess etc.
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The stock market correlates more closely with who got laid the night before than it does with the actual present or future value of a company.
re: Foundry Q2 Revenues IncreaseWaterboy, I gave you a "5". Not sure I agree however that the market expected better results. I prefer to believe, having listened through a number of Bobby Johnson's quarterly numbers announcements is that he does not show much excitement, no forward guidance, no future thoughts on acquisitions, mergers etc. He is really the lone ranger and gives very little to the analysts to grab onton. I said it before BJ is no Gordon Sitt.
re: Foundry Q2 Revenues IncreaseIipoed, A couple more comparison points for you to ponder over that differentiates future stock valuations:
Distribution model: How does each of the companies get their products out into the market space? EXTR has both direct and indirect channels - FDRY has a direct model only (and tends to favor the "go it alone" attitude)
Partnerships: How does each company help to build expertise on their products outside of their primary distribution channels? EXTR has demonstrated their willingness to foster expertise in other complimentary areas while FDRY has not cultivated any - FDRY expects everything of their "partners" while providing little (or no) incentive.
Product Diversification: FDRY simply rebrands their single product line under different names (BigIron/FastIron/etc...) while EXTR actually creates different products matched for the particular market segments.
Sales Mix: 30% of revenues coming from one individual market sub-segment is dangerous and does not demonstrate good sales diversity...as a matter of fact, this sub-segment has been expanding. What happens when the tides change? Will FDRY be caught with their a** hanging out too far?
Future Potential: How insightful is the CEO of each company to recognize market trends BEFORE they occur. EXTR is very willing to go out on limbs (so to speak) while FDRY waits until the trend develops and then announces they've been there all along.
CEO Capabilities: Which company has better potential for the long-run? Taking a company public is much different than growing a comapany beyone the $1B sales mark...and here, it appears that both companies are struggling.
Don't get me wrong - FDRY has been very successful to date but success in the past is not a demonstration of future success...there are many other elements that makes up the 'market price' beyone engineering prowess.
But I also think Foundry's gonna have some problems pretty soon as well. They are losing deals to Cisco and Force10 in the high end of the market and eventually will get crushed in the mid to low end. === What wins over Foundry in the "high end of the market"? Ive seen grid computing and research network wins from F10. I wouldnt classify those as high end wins. Please explain.
re: Foundry Q2 Revenues IncreaseWiley Well I think rooting for F10 is wishful thinking First they tried to compete on price -- no one cared. Cisco, well Cisco is a force of nature...
Real question is whether share is going to shift quickly or not. Without clear value or technical differentiation tends not to do so
Foundry jumps 4 million in revenue, increases margins close to 60%, new products shipping all over the place, 30 million profits in first half of the years. Their stock dumps on after hours.
Makes no sense. I guess marketing hype is all that matters when compared to engineering excellence.