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TeleCommunication Systems (TSYS) Q4 recap

|Includes:TeleCommunication Systems, Inc. (TSYS)

All in all a pretty wild quarter. Here's a quick recap:

- Started the quarter with a share price of $3.91
- Met expectations for Q3 and dropped guidance for Q4 on conference call.
- Received new govt funding of $58m
- Received new govt new orders of $101m
- Received govt orders with lifetime ceiling value of $671m
- Bought another defense contractor Trident for about $26m. Trident projected to deliver $40m in revenues and $6m in EBITDA in C11.
- Share price ran up above $6 briefly before steadily dropping to its' current level of $4.71 up 20% on quarter to date.
- Analysts (8) continue to rate TSYS a buy with a $7 price target.
- Analysts dropped Q4 and Q1-11 estimates which contributed to the stock price drop.

My reaction to Trident acquisition is modestly positive as follows:
Price point was good. Buying $40m of revenues with 15% EBITDA for around $26m is a pretty inexpensive.

More govt is a negative. The commercial side of the business (aside from cyber security which will cross over) is much more valuable so anything that focuses on govt isn't positive in my view.

Growth rate is a negative. The first look RBS report stated that Trident's revenues at $40m were flattish. So TSYS gets a add-on bump for C11 but makes it all the more challenging to show 15-25% growth in C12 and beyond.

Intl focus is postive. Trident's revenues were international which could provide opportunities that allow more growth cross-selling expertise but ways.

BS in a negative. Even though the price point wasn't bad, the use of around $10m of cash in an environment where we need to improve the BS and pay off debt isn't positive.

C11 EPS is a positive.  Company stated in press release that deal was accretive.

Stocks: TSYS