Nighthawk Awakens To A New Day
NIHK ended a long period of silence today with very significant news- the kind the market should embrace. Apparently, the set top box business is coming along very nicely, and can we start to think about NIHK finally turning profitable?- no, scratch that- cash flow positive in 2008?
In today’s news about the follow on order for 1500 desktops, Doug Saathoff predicts the company will generate $8 million plus in revenues in 2008- this from a company that was barely able to scratch out $1 million in revenues over the past several years.
$8 million in revs should generate about $3 million in gross profits- a number this little company that could has never seen.
Year end numbers will be quite interesting as we will get our first look at the new company balance sheet with the debt associated with the acquisition of the set top box business.
The stock is finally showing a little life today after a few months of very listless trading with a bias to the downside. Pretty much sounds like every microcap stock to me.
Here’s a chart:
As you can see, the stock has been chopped in half going back to October, which is when the Bear Market really started.
Today’s move is very promising technically as it represents a break out above a pretty long term downtrend line.
However, I’m not seeing enough volume for this to really jell into any sort of big move. We’re just not in that kind of market.
For long term shareholders, this is great stuff. It’s faith time- do you have enough faith to believe the fundamentals will eventually turn into much greater volumes in other markets ahead?
If so, this is a great one to accumulate for the next bull market in micros, which might not be all that far out into the future.
Comments and questions are welcome.
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Still within the down channel..
NIHK is still moving within its downward price channel with a top of ca. 0.052 and a bottom of ca. 0.038, eiter breaout of the channel would be - in my opinion - a significant sign. A break through downwards would signal a price evolution way down into the 0.02 value, break through upwards might signal a price evolution to a hopefully as you stated sst of 0,125 - 0,130.
Wondering which way this stock will go. Anyway, stochastics do not suggest the bottom has been reached up to now, although stochastics does suggests a temporarily rebound into the 0,06 or perhaps 0,065 region. But all this is ‘technical’ reading, but, recognizing that ‘technical’ readings reflects a psychological approach to the stock, not to ignore. But, of course, we have to wait to the correct economic information (sec filings), before we can build ourselves an idea of what the company and in the longer term the stock might be worh, expressed in stock value in dollars (or euro’s).
I’m in for some 500 000 now, holding them in ‘belief’ in the company’s possibilities. However if stock does go belov 0.042 I guess I’ll sell and buy back at 0.025 or so.
Kind regards,
Bart
Editor: I don’t believe the 10k is going to be a market moving event. It’s just needs to be filed before there can be any market moving events. I believe the 10k will show us the company’s debt levels relative to the acquisition of the set top box business, and the most telling number- the current number of shares issued and outstanding. That will give us some idea of the dilution related to the Dutchess financings. It that is reasonable, I suspect this stock will have more good days ahead of it.
Comment by Bart — 4/10/2008 @ 7:38 am
I agree, retrofitting is where the volume is but nihk doesn’t seem to be enjoying much success in that area. Am I impatient or is someone else taking those sales from them?
Editor: Not much to say about this one until they file their 10k- they filed for an extension- it was due on April 1- if they don’t file by April 15, they will be really delinquent.
Comment by JD — 4/7/2008 @ 6:00 pm
Sheraton just announced they are opening 20K new rooms by 2009. That’s a new hotel every 12 days for the rest of this year. Is this the big customer nighthawk currently has for the set top box?
Editor: NIHK has never disclosed who the customers are for competitive reasons. However, new hotel rooms are nothing when compared to the number of existing rooms that need to be retrofitted for hi def.
Comment by JD — 4/7/2008 @ 11:46 am
As volume is low on the stock tradings, so are questions and comments it seems.
However, if NIHK can hold around 0,05 for another 2 weeks or so, it will be be breaking very gentle the downward channel which started somewhere in the second half of septembre, just to be broken by a short lived outbreak above the channel around end octobre. This outbreak, as you editor stated very correctly did however not show the required volume to be longsustaining and very substantial.
But now the gap of 0.048 is covered, which I mentioned in earlier comments, the stock can get moving upwards. I hope in a rather gentle way, in a solid upward channel.
That would be a very good sign, I guess, given the still ‘not bull’ market and the danger (reality?) of a recession.
What do you think?
Editor: We just need to see volume materialize again. The buyers strike on micros isn’t limited NIHK- it’s epidemic across the board. As the market improves, the microcap switch will eventually flip back on, and these stocks will start behaving better one by one.
Comment by bart — 4/3/2008 @ 8:44 am
Late reporting do you think it matters or does anyone even care about this stock anymore?Dutchess basically put the screws to this stock ever going back up imo.
Editor: Not at this point in time. There will come a time.
Comment by Anonymous — 4/2/2008 @ 10:15 am
What if you look at the chart another way? I tried to ‘insert’ a chart in this comment but didn’t succeed technically. However, when you draw a topline from the somewhere mid-july high over the septembre and february high, you see that NIHK never broke out upside that downwards oriented line. It’s a very nice downward ongoing line. So I’m waiting to a real upside break of that upper line of the downward price channel.
If you give me a hint to send you my chart and
‘lines’, I’ll send it to you with pleasure. However, it seems this ‘your comment box’, does not allow to insert any charts or pictures or so. So, at this moment I can’t send you my chart.
With kind regards, looking forward to your comment.
Bart
Editor: I’ll have to ask my techies if it’s possible to allow for the insertion of images. That would be great. I would love to see, and have other people see, how others are interpreting the chart. Will look into it. Any way you look at the chart, we need a volume break out to stimulate interest.
Comment by Bart — 3/26/2008 @ 5:18 am
The past 2-3 years this company has released its annual and 4Q results in mid-April. I’m assuming that’s when we will see them again. Each quarterly release for the previous year has shown nothing but positive news, such as record revenues, but every time it comes out the stock goes lower. Assuming the market stays on its semi-positive run right now, do you think the million dollar revenues we’ll see in Q4 and annual will give this stock a boost? I see this blowing up within one year from now if all goes well with the positive cash flow. Thanks.
Editor: I believe investors would like to see how the balance sheet came out, but on the whole I agree. The problem right now is the micro market. It’s very tough. Micro investors are on the sidelines. Stock should do well when they come back. I just can’t say when that will be. However, after last week’s action, it looks sooner than it did the week before.
Comment by ed — 3/24/2008 @ 7:54 am
It seems NIHK finally reached it’s longer term ‘technical’ bottom, somewhere in the 0.048 range.
However, I wonder how much debt does NIHK have? And, when and how will NIHK evolve into a more profitable company, reducing debt and evolve into a positive balance. What’s your view on this, when will NIHK escape from debt?
Editor: We’ll see when they publish year end numbers. They took on a fair amount of debt to buy the set top box company, but it might have been a great investment. Will be looking at the numbers pretty soon, as the 10k is due by the end of the month.
Comment by Bart — 3/19/2008 @ 12:26 am
Out of all the stocks you cover what would be the best one for me to buy shares of at this time.Is Nihk one to be bought at .053?
Editor: Wow- very tough question. EFSF is behaving fairly well against a backdrop of a very tough market. PNWIF and SPKL are looking very cheap in the midst of a buyer”s strike. NIHK is reporting nothing but new records across the board, but it’s the only one of the three with debt. The answer is- yes, I would buy NIHK right now, as long as you have a long term perspective. I think it is a bargain in light of the corporate achievement.
Comment by Lori — 3/14/2008 @ 7:26 am
did You finally peak with Doug Saathoff about future of company?
thanks
Editor: I have not spoken with Doug in some time, but will be having a call in the near future.
Comment by mario — 3/13/2008 @ 12:07 pm
if we are in a bear market as it very well feels like it what stocks are you shorting?
Editor: I am not a big fan of shorting stocks, because as a small, retail investor, I like to know what my risk is. When you go short, your risk is unlimited. I’ll let the big boys take that kind of risk. However, I do buy put options occasionally- generally after 4 or 5 up days I will buy some puts on the QQQQs- the NASDAQ Comp. I have done it a few times with some success, and will start offering the timing in the BLOG. I not always right, but I’ve been making a little money by knocking off an occasional trade.
Comment by mike — 3/7/2008 @ 9:10 am
It looks like support just bumpedback up to $0.06 That is +10% from the last level of $0.055. It has been basing nicley, strong case for a near bottom. NIHK will have it’s day!
Editor: Some folks are getting impatient that in light of the recent great progress, the stock hasn’t traded better. People just need to understand we are in a bear market right now, so it’s going to be tough to see any major moves. However, in light of recent progress, it’s really easy to hold this one now.
Comment by Bret — 3/6/2008 @ 3:02 pm
I just cant believe that this stock can not get above .06 on the recent 2 news releases. What is your opinion on the supply of sellers out there.What will it take to get this stock up to .10? Will Moses or Jesus have to appear?
Editor: I guess I just have to keep saying this until everyone understands. We are in a BEAR MARKET!!!!! That means stocks are going to trade poorly. There simply hasn’t been enough volume to get it going, and until this BEAR is over it is unlikely you are going to see the kinds of volumes we saw in this stock a year ago. Therefore, if you are not prepared to be a long term investor, take your cash off the table and get out. NIHK as a company appears to be doing just great. The stock is not - for now. However, their corporate performance makes it easy to hold long term if that’s for you. And, by the way- this is not just for NIHK- it’s for all microcaps across the board. If you are not long term, get out. Here’s what kind of cool about this situation- stocks like this will be able to trade up very easily when the BEAR eventually ends, because the weak hands are coming out. Someday, when it explodes, it will explode beautifully. My hope is we have some sort of rally before the summer doldrums, but I wouldn’t be surprised to see this bear last right through to the Fall. That might not be what you want to hear, but it’s the reality. You don’t read the OTC Journal to be hyped everyday- you read it to get some worthwhile insight and advise.
Comment by mike — 3/5/2008 @ 12:57 pm
When will this company be profitbale that is the question?
Editor: Before commenting, I want to see the year end numbers. I have a feel for ‘08, and I believe the second half of the year is a good shot.
Comment by Eric — 3/3/2008 @ 7:58 am
Why do you believe “$8 million in revs should generate about $3 million in gross profits”. It seems the STB margin is about 20% at this point. Do you have any new info about the cost cutting? Thanks.
Editor: I know they have been working on some cost cutting measures relative to having enough cash to manufacture the parts without needing credit. The margins of the preceding owner of this company were extremely compressed as they had no cash, had to get up from deposits, and depend on credit to manufacture. Their position should allow for margin expansion.
Comment by Tim — 3/2/2008 @ 9:18 pm
I think what’s really hurting nihk, is their balance sheet.
Balance Sheet
Total Cash (mrq): 34.02K
Total Cash Per Share (mrq): 0
Total Debt (mrq): 2.15M
Total Debt/Equity (mrq): N/A
Current Ratio (mrq): 0.136
Book Value Per Share (mrq): -0.018
Editor: Thanks for the contribution, but it’s not much help as these numbers are extremely out of date. The company underway a major balance sheet transformation in Q4, so no one has current numbers. These are out of date in light of the set top box purchase. The numbers will change, but I’m not sure it’s going to make a big difference depending on how the accountants book the asset purchase vs the debt. In either case, if you’re looking for a great balance sheet in a $.06 stock, good luck. This is why it’s a $.06 stock. If it had a great balance sheet, it would be much higher.
Comment by Rob A — 3/1/2008 @ 9:42 pm
Could you elaborate on the microcap cycle based on your experience? Are there actually times where this group is in favor, like smallcaps, midcaps, largecaps? I honestly don’t have enough experience as I only got into this arena (micros) last year with efsf and your publication. Thanks in advance.
Editor: I believe there are times when the microcap switch is turned off, and times when it is turned on. I believe it is a great strategy to slowly accumulate a few stocks you really like when the market is tough- and sell them when everyone piles in again because stocks have begun trading well again. I also believe if the fundamentals turn because of missteps by management (see CPNE and TTGLE) you have to just sell them and get out no matter how steep the loss. Of course, this strategy takes faith, patience, and a long term perspective. I also believe you can “trade” these kinds of ideas shorter term, but that is much trickier and requires a better market than we have today.
Comment by Lewis — 2/29/2008 @ 7:05 am
if I understand correctly this 8 million it’s only from top boxes!? what about revenue from other project about 1 million or more, that also we must add to the revenue?
Editor: That would be my assumption from the press release.
Comment by mario — 2/29/2008 @ 6:46 am