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NWRE -
BOUGHT
at $8.51 SOLD
at $20.00
On April
26th Neoware Systems, Inc., a provider of appliances for thin
client computing, reported fiscal 3rd quarter 2004 revenue of $15.8
million which compares to $13.5 million a year earlier. Net income was
$1.7 million or 10 cents per share which compares to net income of $1.3
million in the year earlier period. For the 9 months ending March 31st
2004 revenue was $46.1 million with net income of $4.9 million compared
with revenue of $41.7 million and net income of $4.6 million during the
first 9 months of fiscal 2003. During the fiscal 3rd quarter 43% of
total revenue was derived from international sales.
Neoware has
increased it's marketing efforts and expects sales to large enterprise
customers, through it's alliance with IBM, to increase in coming
quarters. Because these deals tend to be larger in size gross margins
are somewhat lower. Going forward as sales increase to large enterprise
customers Neoware expects gross margins to settle in the 40% - 45%
range. This is down from the 45% - 50% gross margins Neoware has
achieved in past quarters.
NWRE has
cash and investments worth $53 million or $3.36 per share. Book value
is $3.70 per share and
the
company carries no debt. With a current
market capitalization of $134 million the stock trades at approximately
2x sales.
Above is a weekly
chart of NWRE. In February 2004 the stock made a low and then it just
recently made a lower low in May. At the botom of the chart there is a
Relative Strength Index (RSI). The recent low in May is actually a
higher low than the low in February on the RSI Index. This is a bullish
divergence. Also over the past 2 years the stock has made lows in the
general area it is in now. 3 years ago the stock was lower as you can
see in the beginning of the chart, however at that time revenues were
one quarter of what they are today, the company was losing money, and
book value was less than half of what it currently is. A thin client
appliance is a network computer without a hard drive, CD drive, or
other moving parts.
11/07/05
- SOLD
AT $20.00 FOR A GAIN OF 135%. DURING THE SAME PERIOD THE NASDAQ
WAS
UP 10%.
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