DragonWave Inc DRWIQ

RE:RE:smoke and mirrors

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I'm getting out of this piss poor investment asap. After reading the press release and listening to these monkeys talk on the conference call this company is only going one way - DOWN!!! I wish I had realized this sooner, but I'll gladly walk away down $6K and not risk losing any more.

This "adjusted" cash flow from operations metric is BS... This is a non-GAAP measurement that really could mean anything they want it to mean. From a GAAP perspective, their cash burn from operations in Q4 is approx. $6M+/-. That's just from a quick comparison of their Q3 and Q4 balance sheet. The difference between this number and their number (I think, as you have to make a lot of assumptions on their "adjusted" number) is their poor management of their balance sheet. Their A/R has gone up 10%+ on a reduction of revenue. On the call they mention this is due to some big contracts that have yet to be paid - or some BS like that. This statement is trying to steer accountability away from their management team and put it squarely on their customers shoulders!!! Really???? Balance sheet management is a key responsibility of their CFO and finance team. Their debt is reaching their current limits and they say they're going to burn more cash in Q1 & Q2 2016???? They'll need to renegotiate their financing agreements and/or issue more stock when that happens.

They've also written off 5% of their inventory levels in the quarter and I over 10% for the year??? I'm not familiar with what the benchmark in this industry is, but this seems extremely high to me. Again, this shows poor management of one of their key assets. I'm sure if they were asked they would blame this one on their customers too. I can just hear it now... our customers just aren't buying enough product which is forcing us to scrap almost $3M or 11% of our average inventory balance every year.

Their lack of taking accountability for continually poor results and lack of visibility into some key (and very basic) financial metrics is a clear signal that this management team needs to go. Since they're not going anywhere, I am. Out of this as of today. For those who decide to stay in this one for the long term I truly wish you luck. Typically when I exit an investment there is a 40% plus gain in short order.