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China Techfaith Wireless Beats By $0.04; Guides Above Consensus; Stock Up 12% in After-Hours Trading (CNTF 3Q05 Earnings)

I was wondering where everybody go. Busy trading CNTF? just kidding... Hope those who bought and held at the low enjoy the ride yesterday. What a push upward! Let us congratulate each other on helping an undervalued firm who is doing a great job at optimizing the cost structure of the mobile handset segment.

After all, the earning report was nothing new. All the information in it was disclosed before. So, it was not a difficult task to figure out the numbers before the earning release. The management already told you everything about it well before Nov. 15. On this aspect, I have to say the stock could be rated the No. 1 manipulated stock of the year. Everyone who followed the stock closedly knows what I am saying. I have no interests to dismantle all the tricks played by someone. It was just disgusting as it could be.

But, I have to agree with goldenlion here. The cash side does not look at all. I have a strong feeling that it becomes very difficult for CNTF to get enough contracts to support the revenue number. The followings are the questions I want to ask the management next Monday on the investor conference. Here I invite you all to share your thought on one or more of these:

1. What happened to the cash? Why the cash flow from operation become so weak?
2. What happened to the advance from customers? Is it an industry trend that clients reduce or stop paying advance or what?
3. Why do we see a surge in the selling and marketing expense in 3Q 2005 as a percentage of the total revenue? Is it becoming more difficult to get customer?
4. And, why did the R&D expense drop this far in 3Q?
5. In what kind of currency do you hold your cash and where? How much interest do you earn on that pile of cash and why do we see a big drop in interest income in 3Q compared to 2Q?
6. What is your DSO? Does it deteriorate in the 3Q? How do you select domestic clients since they are not creditworthy? What will be the mix of revenue in the future?
7. What is your expected capital expenditure in the future?
8. How do you comment on CNTF versus competitor in India and Taiwan and other regions with quality and low-cost labor?
9. Do you have a plan to have your own brand name or be acquired by a brand owner in the future?
10. Do you plan to expand into other area of brain outsourcing?

Although those questions dealing with the financial strength side might be related to short-term things only, but a clear answer would make us feel much better.