Q3 results are 3-4 weeks away Here is my base prediction:
- Revenues are flat to last quarter, which remain well below expectations.
- EBITDA is negative on a consolidated basis, well below expectations
- Supply chain issues remain in place and outlook remains quite challenged and the margin improvement forecast will be withdrawn
- Blame sale process distraction for the WiLan miss. And supply chain issues for ITS miss. And customers delaying decisions due to interest rate financing costs in building infrastructure.
- All analysts cut price targets, except Cannacord.
The key risk factors:
- Major goodwill and patent asset writedown leading to a ($0.75/share book value writedown)
- Indicate the environment is unfavourable to a patent transaction and ending the process at this time
- Labour challenges lead to more customer special charges due to inability to complete projects on time
- Buy another money losing company and drain the cash substantially placing the firm at liquidity risk.
- Raise common equity at time of acquisition.
- Senior management departures as their options are worthless and unlikely to pay out.
The positives could include
- initiate litigation against Align Capital and their bankers for misrepresentations during the ETC sale process
- resolution of a patent dispute
- longstanding Board members resigning