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So I am sitting in front of my computer and all of the sudden I look up at the wire, and see the following: Radcom halves revenue view; suspends financial outlooks.

Keep in mind that when I learned to read in kindergarten I was taught with the method of word recognition. Which means that you look at some of the letters and basically guess as to what the word is. So when I saw Rad… I just assumed that Radware (NASDAQ:RDWR) was the company that warned.

As I posted last month, Radware has a propensity for warning, I think we are up to 5 quarters in a row, and I was about to dump the stock back then, but decided to hold. Then, a few weeks ago CIBC upgraded Radware, and my colleague Zack Miller was singing my praise.

Well, I decided to actually read the story, and much to my delight, after deciphering all the letters I found out that Radcom (NASDAQ:RDCM) was the one that warned. Again nothing new, as it has a nice track record of warning as well. The only bright spot is that I learned my lesson and I sold my position after last quarter’s warning.

Radcom develops, manufactures, markets and supports innovative network test and service monitoring solutions for communications service providers and equipment vendors. The Company specializes in Next Generation Cellular as well as Voice, Data and Video over IP networks. In the press release the company said:

The second quarter was another disappointing period for us, reflecting both market conditions and the fact that we are still in the process of solving a variety of tactical execution issues.

When a company says it is trying to solve some “tactical execution issues,” it should be cause for worry, and avoidance of the stock would be prudent. But in this case, something interesting has recently happened. On the 29th of May it was reported that Zohar Zisapel, the Chairman and largest shareholder, had acquired 263,300 RADCOM shares during the month of May through purchases on the open market. Zisapel now holds 3,626,342 RADCOM shares, representing 22.2 % of the Company’s issued share capital.

Usually I would advise investors to stay clear after a warning the likes of which came out on Tuesday. But, with continued insider purchases, I would keep an eye out for some good news, which may indicate the company is turning the corner.

RDCM 1-yr chart:
RDCM 1-yr chart