SYNC … New att.net site powered by Synacor

  1. The long awaited att.net portal powered by Synacor can be accessed now via the URL ==> http://start.att.net/
  2.  When you visit this URL, you will notice the text “Powered by Synacor” at the bottom left. I have highlighted this in the snapshot of the site in the image below.SYNC

PCTI … Uptrend continues

PCTI goes ex-dividend tomorrow. Shareholders will get $0.05 in dividend. PCTI reported good earnings yesterday and now technically the stock is in an uptrend and pushing above its 200 DMA. I expect PCTI stock to do well for the next few quarters.PCTI

SYNC … Reports solid earnings

SYNC reported earnings today. I expect stock to do very well in 2017 when revenue from the AT&T contract begins to ramp. Earnings should increase nicely too as upfront investment in 2016 for the AT&T contract tapers in early 2017. I will continue to add SYNC opportunistically. Revenue for upcoming December quarter will be between $40m to $45m based on annual guidance of $130m to $135m. This would mean atleast 30% revenue growth is currently projected for the December quarter!

“We delivered another strong quarter for Synacor with significant year-over-year revenue growth and adjusted EBITDA that exceeded our previously announced guidance,” said Synacor CEO Himesh Bhise. “We are pleased with our progress in preparing to support our AT&T business and are advancing in line with our plans for deployment over 2017.”

“We remain confident in the foundation that we have laid for future growth. Our continued trajectory toward $300 million in revenue in three years is reflected in the demonstrated progress we are making against our 2016 strategic objectives,” Bhise concluded.

HDSN and PCTI report good earnings

Hudson Technologies reports Q2 EPS 14c, consensus 11c
Reports Q2 revenue $34.6M, consensus $34.24M. “The revenue increase in the quarter is primarily related to an increase in the price of certain refrigerants, slightly offset by reduced volumes of certain refrigerants sold… We continue to see growth in our reclamation business. We believe there is a broader opportunity for reclamation in response to both the ongoing R-22 production phase-out and for the expected phase-out of next generation HFC-based refrigerants,” said the company
  • HDSN earnings details and conf call link can be found here.
PCTEL reports Q2 adjusted EPS 8c, consensus 6c
Reports Q2 revenue $24.2M, consensus $23.75M
  • PCTI earnings details and conf call link can be found here.

Both stocks should continue to do well for the next few quarters. I will continue to actively trade/invest in these 2 stocks.

HDSN received a big contract from DoD recently. Following comments are from last month.

HDSN: Craig-Hallum analyst Steven Dyer estimates that the “substantial award” to Hudson Technologies from the Department of Defense for the supply and distribution of refrigerants and gases will add $30M-$40M in revenue and 10c-15c of EPS on an annual basis as well favorably positioning the company to compete for additional future governmental awards. The analyst raised his price target on Hudson shares to $9 from $6 and keeps a Buy rating on the stock

HTCH … A short thesis on SeekingAlpha

HTCH is under selling pressure again today. Do Note: I am neutral on HTCH and am not the author of the article mentioned below.

An article outlining the risks on HTCH was published today at SeekingAlpha. Here are the details taken from the article.

On July 26th, the office of TDK and NHK Spring were raided by the Japanese Fair Trade Commission for price collusion in the HDD suspension market which is Hutchinson Technology’s primary business. Our sources indicate that Hutchinson Technologies (NASDAQ:HTCH) management was taken completely by surprise by this news, which is understandable. However, it is now highly unlikely that the U.S. Fair Trade Commission will allow this transaction to be approved. At a minimum, any transaction approval will be severely delayed and will likely go beyond November 1st of 2016 which allows TDK to walk away from the acquisition without a break-up fee or any repercussion.

So now we must look at Hutchinson on the fundamentals which have deteriorated since the TDK transaction was announced last November. Per statements from both Seagate (NASDAQ:STX) and Western Digital (NASDAQ:WDC), Hutchinson’s two primary customers (accounting for 85%-90% of sales), the TAM (total addressable market) for HDD suspensions continue to shrink, which is the market that HTCH serves. Further, HTCH has been unable to diversify its revenue away from the suspension market. It appears any new product development or marketing was put on hold so HTCH could try to maintain a cash position that would allow it to maximize the price TDK paid.

Now the real concern. HTCH has $76 million of convertible debt due January of 2017. They also have $37.5 million due October of 2019 and $13.5 million of bank debt with PNC bank. Given that HTCH has not been profitable for year and has lost $22 million through the first 9 months of FY 2016, we see very few refinancing options for the company. Any equity raise to pay off this debt would basically have to totally recapitalize the company and would be close to wiping current equity holders out. Given the TDK situation, we don’t see how other industry competitors can buy HTCH and given the negative cash flow, a financial buyer is out of the picture.

This situation is very sad and disappointing for Hutchinson Technology and its shareholders. HTCH was a small U.S. based company that found a way to survive and create some value with the TDK acquisition. Now they must operate in a difficult, shrinking market and find a way to pay back significant debt in a short period of time.