Hurco Responds Regarding Fiscal Q1 Warranty Reserves

In my coverage last week regarding Hurco’s (HURC) initial news release for fiscal second quarter results, I expressed some concern regarding the company’s provision for warranty reserves documented in the 10-Q report for the first quarter and indicated that I had not received a response to my inquiries on the subject.

Yesterday, I received the following email from Hurco’s Chief Financial Officer explaining the company’s limitations in corresponding with investors based on Regulation FD. I would like to thank Mr. Oblazney for his response and I am hopeful that further details will be revealed in the upcoming 10-Q report documenting Fiscal Q2 results.

Mr. Nagarajan,

SEC rules limit what I can share with investors on an individual basis. Under Regulation FD, I cannot selectively disclose material information to one investor unless it has been broadly disseminated to the public through an approved means, such as a press release or SEC filing. While it is not clear whether the answer to your question would be considered material, I trust you can appreciate it is difficult to make such a judgment in practice.

However, I have taken your question into consideration as we prepare our second quarter 10-Q. Thank you for your interest in Hurco.

Regards,

John Oblazney

Comments

[wobatus]

god work. maybe we'll get something

2009 Jun 02 08:23 AM

[wobatus]

Ravi, I like the fact that youa dn I are both in HURC, and now I see you just bought WMT, which I bought a little while ago, February, although at roughly the same price, $48.83 . Another seeking alpha author also just bought some wmt, and bragged that following the same value scenario with KO he was already up 16% (ha, I am up 17% in KO). So I beat y'all to wmt by a bit. Just teasing.

Always nice to see your hypothesis shared by others. I don't do quite the leg work you do, but same conclusion. Good value.

I avoid sears for now for the same reason.

Now, I don not always invest ben Graham/Buffett style, but usually, and this has been a good time to pick up bargains for the long haul. Thanks for all your work and sharing.

2009 Jun 02 12:54 PM

[Ravi Nagarajan]

Thanks for your comments and good luck with your investments.


On Jun 02 12:54 PM wobatus wrote:

> Ravi, I like the fact that youa dn I are both in HURC, and now I
> see you just bought WMT, which I bought a little while ago, February,
> although at roughly the same price, $48.83 . Another seeking alpha
> author also just bought some wmt, and bragged that following the
> same value scenario with KO he was already up 16% (ha, I am up 17%
> in KO). So I beat y'all to wmt by a bit. Just teasing.
>
> Always nice to see your hypothesis shared by others. I don't do
> quite the leg work you do, but same conclusion. Good value.
>
> I avoid sears for now for the same reason.
>
> Now, I don not always invest ben Graham/Buffett style, but usually,
> and this has been a good time to pick up bargains for the long haul.
> Thanks for all your work and sharing.

2009 Jun 02 02:13 PM

[Ravi Nagarajan]

All:

I have reluctantly sold my position this morning at 14.75. Here is my rationale:

www.rationalwalk.com/?...

In short, my confidence in management has been impacted by what I consider to be insufficient explanation for the warranty reserves being so low in 1H 2009 compared to prior years. Based on my calculations, earnings may be overstated substantially if we assume prior rates of provisions. I may be off base, but IMO, the margin of safety I require is not present. I may reconsider Hurco if price gets back to the lows of March.

2009 Jun 05 01:07 PM