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Marty Chilberg
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Marty Chilberg is a seasoned financial professional with over 30 years of executive leadership, board, consulting and advisory experience.  He began his career as a certified public accountant (CPA). He moved to Silicon Valley in 1981 to begin his career in the software industry, working for... More
  • Neutral Tandem (TNDM) Q4 review 2 comments
    Dec 29, 2010 12:07 PM | about stocks: IQNT

    It's been a pretty nice quarter overall. It's been quiet of late with everyone waiting for the C11 guidance on the Ethernet Exchange and CommonPoint initiatives.

    Here's my quick and dirty recap:
    - Share price entering quarter $11.95
    - Price hit $16.28 briefly before settling back to it's current level of $14.65 for a 23% quarter to date gain.
    - Tinet acquisition was completed
    - 8 additional PoP were added to EE bringing the US total to 14 ahead of competition and schedule.
    - 99 addl PoP were intergrated from Tinet bringing the WW total over 100 making TNDM the global leader in EE network connections.
    - Analysts still waiting for some clue to C11 are mostly rating the stock at hold with a price target of $18.
    - TNDM broke a series of quarterly earnings misses with a solid beat for Q3.
    - Analysts raised earnings estimates for Q4 and C11 based on results and Q4 guidance.

    Stocks: IQNT
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  • Gino Verza
    , contributor
    Comments (414) | Send Message
     
    Marty,

     

    Thank you for the concise and to-the-point recap.

     

    I'd only add that the price of the stock is at the very bottom of fundamental valuation. In my view the stock should appreciate significantly going forward.

     

    Expansion in wireless data and the strategic (and accretive) nature of the acquisition, kicking in on 10/1/10, are catalysts.

     

    Favorable Q12/10 and FYE12/11 comparables should also help.

     

    Disclosure: Long TNDM

     

    Regards,
    30 Dec 2010, 02:46 PM Reply Like
  • Marty Chilberg
    , contributor
    Comments (577) | Send Message
     
    Author’s reply » I agree. This stock appears to be held back only by the uncertainty of the impact of EE and Tinet on their earnings for C11. Analysts estimates are all bunched which tells me that they don't know how to evolve their models. Q4 cc should clear up that uncertainty.

     

    It's also interesting to look at Light Reading's top ten list for 2010:
    2)Mobile backhaul dominates
    The mobile backhaul opportunity is hanging like a glittery ornament on the Christmas tree of every network operator, including telcos, cable companies, CLECs, and microwave operators. In fact, the network opportunity for connecting base stations to handle anticipated 4G and FauxG mobile demand is so large that major carriers such as AT&T and Verizon have publicly stated that it is driving their network-planning organizations, swamping everything else when it comes to planning network capacity. Fiber to the cell site is the nirvana, but other solutions are competing as well

     

    4) Carrier Ethernet dominates
    As detailed on these pages by the Etherman himself, Heavy Reading analyst Stan Hubbard, Carrier Ethernet has become the dominant technology for data network infrastructure, as network operators look to deploy end-to-end IP in a simplified, scalable fashion. This trend is, of course, tied directly to No. 2 on this list, as mobile backhaul is driving Carrier Ethernet deployment, particularly for all-IP LTE deployments. New this year to the Carrier Ethernet market is the growth in Ethernet exchanges from companies such as CENX Inc. , Equinix Inc. (Nasdaq: EQIX), Telx Group Inc. and Neutral Tandem Inc.

     

    Both of these trends should provide some nice tail winds for the category and if TNDM is #1 or 2 in market share by C11 Y/E it will have been a good year indeed.

     

    Doesn't even really factor in the domestic termination service for intl calls which could turn out to be a real sleeper.
    30 Dec 2010, 03:51 PM Reply Like
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