Radvision: Could its "Bad" Vision Get Any Worse?

Leave it to the RadGroup to disappoint. After suffering through warning after warning, and earnings miss after earnings miss, Thursday’s Radvision (RVSN) earnings report finally did it to me. Like the poor sucker that needs to play defense all night against rookie phenom Kevin Durant, (SAVE OUR SONICS!) I am exhausted and ready to throw in the towel on Radvision. Ever the eternal optimist, even I am going to say adios to the video-conferencing company. It’s that time of the year so at least I will take a tax-loss( okay–a sizable loss) on the stock.

Boaz Raviv, Chief Executive Officer, commented:

Despite better-than-expected revenues for our TBU, on-target sales through our channel partner Cisco, and accomplishments company-wide, our performance in the third quarter of 2007 did not match our original expectations. This was due to slippage of some expected sales and the fact that our High Definition SCOPIA® Platform did not yet offer Continuous Presence, which resulted in lost potential sales in the third quarter, as we previously reported.

We now plan to focus on strengthening our reseller channel while fully supporting our OEM relationships. We believe our advantage as an independent network provider combined with the strength of our product portfolio will enable us to be successful in this effort, although we are realistic that it will take time to reach our goals.

Our fourth quarter forecast is based on this realism as well as our expectation that our sales through Cisco (CSCO), and those for our mobile product line and our TBU products will be in line with those of the third quarter of 2007.

We are fully determined to get back on track with our growth trend. We expect to do so no later than the second half of 2008. We are fully confident in our ultimate success.

So its Q4 forecast is based on “this realism,” well, what were this year's previous forecasts based on? When we start hearing second half ‘08, you can rest assured that that will be an optimistic forecast.

What’s unfortunate is that Radvision’s technology is great, and its relationship with Cisco, always gives hope of a potential M&A. But keep in mind, Cisco CEO John Chambers is no dummy. Why should he buy the company at a market cap of $260 million, that is down from $550 million 6 months ago, when he knows that he probably will be able to get it even cheaper in a few months time.

Radvision is a stock to keep an eye on when it's under $10/share, or as we approach Q2 ‘08. Until then, you might as well take your tax loss, and move on.

Disclosure: The author has a position in RVSN, has no other position in any other stocks mentioned, as of November 4, 2007.