RDA - Nothing like buying a stock on Monday morning, then getting first earnings report on Tuesday morning (RDA Microelectronics Announces First Quarter 2013 Financial Results). I guess the market liked them (a bit) as they were up 1% on the news. I did learn one new point when I read the press release (pretty embarrassing); they had recently had an ADS offering of about 8 million shares. Share counts did not change for the quarter, so I am now confused on whether this was simply the shifting of shares from China to the US, or whether they are "new" shares. I think it is the first as here is the phrasing:
"...has announced that the follow-on public offering of an aggregate of 8,350,000 American depositary shares ("ADSs") by the Company and certain selling shareholders was priced at US$9.25 per ADS. Each ADS represents six ordinary shares of the Company. The Company will be selling 100,000 ADSs and the selling shareholders will be selling 8,250,000 ADSs."
That would make me feel better as additional share count would be dilutive and then I would not understand this comment:
"The Company also announced that it is extending the share repurchase program under an open authorization originally approved by the Company's board of directors in 2011. The Company had previously fulfilled a $15 million repurchase authorization as of March 2013. The Company will continue to repurchase ADSs in the open market from time to time in amounts that it deems appropriate under predetermined pricing and volume limitations."
I could not understand why they would re-purchase shares if they just issued shares. But perhaps they did not issue shares (in total). I did learn that one big company RDA supplies is Samsung.
SD - This seemed to me like a very messy "kitchen sink" kind of quarter as they bid farewell to the old king and bring in a new king (SandRidge Energy, Inc. Reports Financial and Operational Results for the First Quarter of 2013). SD is my 3rd largest holding (after GNW and AAPL). Going into today, I am actually up a bit, average purchase price is $5.33 and they are $5.39. So if I sold, I would not be able to buy much more than a fine cup of coffee here in Switzerland, but I feel like the visibility on this stock is limited. I will likely wait a week until I see what Prem Watsa and leon Cooperman have been doing with their positions.
CA - Computer Associates reported last night as well (CA Technologies Reports Fourth Quarter and Full Fiscal Year 2013 Results). They traded down sharply (6%) after hours, so it is clear Wall Street was not a fan. This is a dodged bullet for me as they were on my original consideration list for new purchases on Monday... glad (so far) I bought RDA instead. I am reading their report right now. Here is a phrase that really bothers me (though I am sure it is in a lot of tech financials):
"Year-over-year non-GAAP results exclude purchased software and other intangibles amortization, share-based compensation, and certain other gains and losses. The results also include gains and losses on hedges that mature within the quarter, but exclude gains and losses of hedges that do not mature within the quarter."
How do you get to exclude "share-based compensation"??? If one company compensates their employee with a $10,000 cash bonus and the other gives the EE $10,000 worth of stock, are they not one in the same to you the owner of the company? They certainly are to the employee. I guess they may have to hold the shares for a while. But it seems like a real cost to me and thus many tech firms that use this practice are over-stating their "non-GAAP" income IMO.
Hmm, I am getting steamed. I am liking CA less and less just from the way they word things.
CHARGE TO REBALANCE RESOURCES WITH BUSINESS PRIORITIES
The Company also announced it would be taking a charge of approximately
$150 million in FY 2014 to rebalance its resources to better align with
its business priorities. It said the charge would cover the termination
of approximately 1,200 employees worldwide and the consolidation of
development sites into centralized development hubs. A majority of the
personnel actions are expected to be completed by the end of the first
quarter of fiscal year 2014.
What the heck? "Rebalance Resources With Business Priorities"??? Do not think I have heard that one before. That is approximately 10% of their workforce. To me layoffs like this are double-edged (as an investor). Perhaps it is good, as management is taking difficult action that appears to be necessary. But it has to hurt morale and suggests that future business prospects are not all that hot. Finally, they gave a 2014 guidance. GAAP earnings are expected to be down 25%. Non GAAP (thank God for non-GAAP) are only supposed to be down 4% to 7%.
I can see why they sold off last night. Heck, I don't want to own them any more. But they are part of my February MFI tranche, and I will follow the rules and not sell in a blind panic.
OK, enough ranting for the morning. Let me go find the fine cup of coffee.
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I am still thinking about the re-balancing. Gad, $150m seems like a pretty big charge. How much are these riffed employees getting? That is $125,000 per head. Does anyone else think that seems very pricey? I am starting to think CA is a little bit too clever.
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