Comment on Vitesse Q107 Conference Call Notes by Andrew Schmitt

By Andrew Schmitt
I am more concerned about inventory management. If networking revenue was down 10% but they burned off $5M of inventory (and gained cash) in the process it would be a net win. If the softness in networking grows inventory then I am very ...

I am not too concerned about it. As I have written before, my interest in the company is based on the value of the underlying assets. Vitesse networking products are an annuity that will pay dividends for many years. I prefer not to drive myself crazy worrying about next quarters revenue.

I am more concerned about inventory management. If networking revenue was down 10% but they burned off $5M of inventory (and gained cash) in the process it would be a net win. If the softness in networking grows inventory then I am very worried.

The metrics by which I think Vitesse should be judged are cash management, protecting the integrity of the existing business, and exploring strategic divestitures/combinations that would extract more value from them. I am not concerned about fluctuations in their end markets.

The fact that we see volatility now is a good sign that distribution is no longer buffering results.