Friday, December 10, 2010

Comtech Struggles

Comtech (CMTL) reported earnings yesterday (Comtech Telecommunications Corp. Announces Results for the First Quarter of Fiscal 2011 and Declares $0.25 Per Share Quarterly Cash). Obviously the market wasn't a fan as they dropped about 11%.

When I looked through them, I didn't really see anything unexpected. But I guess the market was looking for news on future earnings streams. I don't have any trouble waiting a bit. With all their cash ($21 per share) and a solid dividend I am not worried. I think there is a pretty good chance with the solid quarter and the drop in price that they'll be in the top 30 screen shortly.

CHKE also reported earnings a couple days ago (Cherokee Inc. Announces 3rd Quarter Fiscal 2011 Financial Results). I guess I was mildly disappointed. I thought that retail might be bouncing back a bit and we'd see it in CHKE's numbers, but their royalty revenues were down from 8m to 7.7m. Throw in slightly higher expenses and it isn't exactly a positive trend. Making 26 cents a share and paying 38 cents in dividends is not sustainable. I think I will give them one more quarter. If they cut the dividend, the stock could take a tumble.

The CEU saga continues. They did announce a $10m buyback (China Education Alliance authorizes a buyback of its common stock up to a value of $10 mln and is valid through Dec 1, 2011) which caused the price to stabilize a bit. The D&O Diary, which is great reading, commented on the irony regarding CEU in that the two biggest trends in D&O lawsuits have been for-profit education and Chinese Reverse Merger stocks and with CEU you get two for one! (Securities Litigation : The D & O Diary).

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