NWKI took a bit of a beating inexplicably last week, and naturally investors are concerned. Whenever a stock sells off abruptly, there are always concerns about any undisclosed problems.
Here’s what I know about NWKI. The company made the turn into 2005 with the highest backlog of contracts in its history. Their acquisition opened the door to US Govt business, and sales are strong.
They got the contract from Comcast to handle the networking installation at the massive Playa Vista community project in West Los Angeles.
But by far, the most important news, was the addition of Jeff Hultman as CEO. If you want to bet on management, you should load the boat on NWKI. Hultman was the former CEO of PacTel, and ran the company as it grew from $100 million to $1 billion in sales. This guy was a pioneer in the wireless build out.
Today, it’s wireless internet access instead of wireless phone calls.
The chart brings up some interesting thoughts. I included volume in this chart, because I wanted everyone to note the January volume as the stock was trying to climb was considerably higher than the volume during the recent decline. The volume is too light for a true big sell off.
Also, the stock briefly dropped below it’s 38.2% retracement level, but managed to close back above at $1.80. If $1.80 holds, the stock will probably rebound.
It seems like someone just decided to sell on a day when there was an absence of buyers, and the stock kind of fell in a vacuum. Bargain hunters then surfaced, and the stock rebounded.
Comments and questions are welcome.
Why is it they list some contracts with the dollar amount and some they don’t? That looks fishy to me.
Editor: Probably the dollar amount is not mentioned if it is either too small or the client company doesn’t want competitors to know. This is fairly typical.
this is a crazy market….. any good news has no effect on the the individual stocks and there seems to be little faith in them and or the total market…… there is so much fear with past corporate scandals and the present situations that face us today internationally and nationally….. money is on the sidelines, shortinterest is close to being the highest ever and people are undecided as to where to put it especially when interest rates rise and safe money heavens are paying better now then in the pst few years….also stocks paying dividends are even more intrigueing … but those of us must have resolve and believe in the market and in the individual stocks that have not been recognized because when they are there will be no time to pick them up and then it will be to late to recieve the rewards and appreciation we all look for… this market not only being oversold technically but emotionally has made most unsofisticated investors learly…. it is almost making the case for the otherside to make sure private investment acounts do not succeed….. which is another item to discuss later……… but this humble investor is for them………. look now for those stocks u have faith in and take a position and or cost average down….. be not afraid for this to shall pass if the corporate structures continue to make and reach their goals and u will be rewarded quite nicely……
Editor: Your comments are well thought out and welcome.
The implementation of VOIP on a world wide basis will require all the resources that anyone can amass. If NWKI has the management, the work and profits will be available.
Editor: Considering the history of the CEO, I like our chances.
would now be a good time to pick up more stock while it’s cheap?
Editor: I believe it is a great time to start or add to a position, but not if you are looking for a short term trade. If you don’t mind holding through the year, I think it’s great. If you are just looking for a tradeable bounce, forget it. It’s not the company, it’s the market.
When is the next quarterly or annual report due? I have seen no advance notice from NWKI.
Editor: Numbers should be out this week for year end. They won’t mean a lot relative to what happens this year.
any reason why the stock took such a hit friday? Would this be a buying opportunity or wait to see if it goes lower?
Editor: I believe this stock is going down just because it is going down. Nothing has changed fundamentally at the company that I know of. Probably due to bounce pretty soon. I’d like to see it stabilize before suggesting adding to positions.
Did you obtain the Reuters Investment Profile on NWKI published 5 April 2005? It cost $20 and I am wondering if it is worth reading.
Editor: I am quite certain it is not worth $20. Any Reuters investment profile would not have been written by a human after reviewing the company- it would be computer generated and extract all its information from the company description and SEC filings.
Now Network Installation along with American Water is delisted because of a late filing! When will they get their act together?
Editor: NWKI is not in the same boat as AMW- NWKI will simply trade as NWKIE for a few days. This is typically what happens, and there are about 400 companies in the same boat right now. This is why I am so concerned about AMW- most of the time they just trade with an “E” at the end of the symbol, which gives them another 30 days.
I concur with your analysis of NWKI’s potential, but is this sell off today just because of the year end late filing or could there be more that we don’t know about , ie AMW and their late filing? The downside loss from tow late filings in a few days from a small core of stocks is hard to take.
Editor: I believe the selling was just because of the late year end filing. Typically, when a company gets the “E” at the end of the symbol, it means they have another thirty days to file. This is why I am quite concerned about AMW- there are about 400 companies that got the “E”, which is the norm. I don’t know why AMW didn’t get it- perhaps there is something more sinister than a simple late filing due to a change of auditor. Nevertheless, there isn’t a thing anyone can do about until they file their 10K and the stock reopens.
And now that the stock has gone up to $1.40 followed by an immediate $.30 decline, your thoughts would be?
Editor: I believe the stock lost $.30 just because they got the “e” on their symbol. I have seen this happen to many companies over the years. Sometimes it indicates a problem, and other times it’s no big deal. They just needed a little extra time. I am not aware of any major problems at NWKI – something could come out in the 10K that is problematic, but it doesn’t seem likely. It’s not the sort of business that lends itself to any bizarre shenanigans.
Regardless of the outcome, I have a lot of confidence in new CEO Jeffrey Hultman. He has a great resume, and based on faith I expect the company’s progress to accelerate later this year.
Do you have any idea when NWKI will have their Year End Filing Complete, and also why are they filing late? It seems like such a promising company. Thanks
Editor: I am told they should be filing this week. They are late because of the change in auditor at the end of February, and some issues related to how they book their revenues.
Just thought I would let you know that I have accumulated some more NWKI(E) during the current selloff. Obviously, I am expecting no negative surprises in the annual report, in fact just the opposite. I worked for a contractor in a similar business (HVAC control systems) some years ago, and I am impressed with the way that the revenues are growing. This is the kind of business where most of the revenues drop to the bottom line after the fixed overhead is covered. Granted, overhead for NWKI isn’t “fixed” as they are expanding geographically and into new areas of service, but I think the principle still applies. Let’s hope I’m right! By the way, I took some lumps on AGSI and AMW before selling, and I never felt you were responsible for their poor execution. As you are careful to point out, there will be many losers in microcap investing.
Editor: I don’t believe there are going to be any major negative revelations coming out of the 10k to the negative, and the company is working on a couple of potentially major events. Sorry you haven’t picked any of the winners so far- there have been a few, but nothing so far this year. Stick with us- we will find you something that works.
Quick question…are u going to have a follow up on this one soon……… with all the good news out it seems like it should be trading alot higher on forward results…….
Editor: Yes, later this week once the “E” is gone.
I see last Friday the much anticipated quarterly report appears to have been filed. What is “normal” from resuming trading without the “E” suffix?
Editor: The “E” is gone now.
Couple of things concerning the filing: 1) Why is it that the 9 month revenues released in NOV 2004 were higher than 1 Year Revs just released? Is it a result of how they are recognizing revenue now? 2) Is NWKI also planning to file the Q1-2005 financials fairly soon. I believe they are due May 15th.
Editor: yes, the revenue recognition change is a big issue. I am gathering the facts on this issue, and we will publish an edition on it tomorrow or Thursday.
Unless I am missing something, the 10K was very concerning to me and it came as a surprise. Why is the new CEO so upbeat when the losses are widening and the auditors listed their obligatory “going concern” statement without an infusion of new capital? Will this be addressed in the near future?
Editor: The change in accounting method skewed everything for the worse. Will be publishing an overview on the whole issue soon- perhaps tomorrow.
I’m waiting for your overview of whats happening at NWKI, is there any news?
I published an overview last week as it related to the year end financials. News on the acquisition front is what I believe could get this stock going again.
What are your thoughts on the Q1 financials. They definitely show improvement but the package the CEO got caught me off guard. That is a lot of money to pay to two guys. I guess this puts them on the hot seat…
Editor: If you want the company to have a big future you have to bring in a big gun. You don’t get guys who take companies from 100m to 1 billion cheap. They command pretty favorable compensation packages. It’s our best hope for a big win.
The stock has been dropping and about a month ago the news was it get get moving again- it has in the wrong direction. Any news on why it’s taking sucha beating? Is it time to get out?
Editor: The stock is trading very poorly on anemic growth. I believe if you are going to be in this stock, you have to give the new CEO a little time to put something together. I published an edition on their largest VOiP order last night. If you are missing some editions, switch your email address to Yahoo- Hotmail is notoriously unreliable.
Can you tell me what is happening with this company lately. I have seen the latest press reports and have noticed no value put on the latest deal they made. What is there current startegy to grow the company and thus raise the stock price. They seem to be very quiet. Thanks
Editor: The only strategy they can pursue to really grow this thing is by acquisition. They were working on a huge on which recently was shelved. They are working on another now. They will pull something off soon.
How about an update on NWKI. Hit $1.00 at the close today and while I sit with this one and AMW along with FMLY and … can’t decide which one I should shoot myself over first??? How bout some guideance since I got all of these wonderful idea via your newsletter LOL!! Chris
Editor: OK- here’s my guidance- it’s the same thing I have been saying over and over again on both of these stocks since the April 2nd edition. If you are not long term, sell them both. At this point I believe we will probably need to get through the summer before things pick up. Translated, this means the stocks could go down more. If you are worried about where they are trading in 2 months, this is not the time to be in these kinds of stocks.
well…….. happy 4th……and the first half of the year has ended………. question being will u be doing a follow up on this company soon, for as all as the contracts they have recieved etc. i would think they should be doing better, yet the stock price is on a yearly low and if this breaks this support it might go to the bottom…….. it would appear if all was true that it should be a buy ….. but would like your comments to the situation……….. thankyou jimbo
Editor: I expect to do some follow up coverage as early as tomorrow. The stock seems to be going through a capitulation phase, just exactly as it did last summer.
Another $1.1 million order announced today…so the stock can be expected to go down by another 10%!…wonder if the investors think that these new orders are ‘give aways’ by the company to get market share
Editor: Comments in today’s edition which just started going out. If you decided to hold stocks for the long term after the April 2nd edition, you have to be willing to put up with erosion in tough markets.
Do you have any short term outlook for this company? What is going on? Is this a time to sell if you got in under $1. or do you think the price will keep going up? Thanks.
Editor: I am betting on the management to pull off some sort of merger or acquisition to expand the company much more rapidly than it is currently achieving. Short term I believe the stock is probably due to take a breather after a 50% rebound, but long term it is a sound speculation. I still don’t believe this is a good market for short term traders. You have to find stocks that are so blown out they can only go up.
I didn’t have time to sell this off and make anything. It fell back just as fast as it grew. Now what? Everyone likes to make a quick buck but it sounds like this is a hold.
Editor: Perhaps the correct strategy is to wait for oversold pullbacks and buy the stock when no one wants it or is paying attention. That’s a good strategy for just about any microcap you might like.
In reviewing the Income statement for Mar 2005 quarter I see that the SG&A expenses went up from 816,000 in previous quarter to 7.4 million doolars while the revenue went down! All the capital raised through new shares paying for SG&A? Where are they going to find the cash for more acquisition except more shares dilution?
Editor: Suppose they get bought and the CEO takes over the new combined companies? – also, you are not including how much of the expense was non-cash, and the fact that they retired 5 million shares from the old CEO.
If this concerns you, you should sell the stock and get out. These are definately challenges, and there is no denying it is a high risk situation.
It was nice to see the increased revenues in Q2 in the latest financial report. Now in the first two quarters NWKI already has more revenues than all of 2004. This should hopefully change the momentum. looking forward to the conference call on Aug 16. Wondering if they delayed it because thbey may ave something else to report then. Would definitely be nice.
Editor: The conference call is delayed only because Jeff Hultman is on vacation this week. The conference call has been delayed for that reason.
What’s going on with this stock? It seems to keep falling!!
Editor: Along with everything else that is not energy. Look for this one to come back- company on the verge of a major breakthrough.
Do you see the breakthrough in mid or late 06?
Editor: As far as NWKI goes, here’s how I see ’06. I believe the company will work on a major financing- probaby in the $20 million range. I also believe they will complete enough acquisitions to get the revenue stream approaching $100 million. From there, they will no doubt upgrade their listing to AMEX or NASDAQ sc somehow. Where this takes us as far as stock price and when is hard to say. Whether the market likes telecom or not will have a lot to do with it. As the year unfolds, I will be able comment more intelligently.