About Murray Cass Expertise I am eager to help investors find their way through the muddle of tech investing. I can answer questions concerning tech investing, financial reports, stocks, and options. Having worked in the computer industry for over 20 years I have a good general knowledge of computer technology. I have read over 100 investment books -- mostly the old ones. I spend my time doing investment research, attending annual shareholder meetings, and managing portfolios.
Experience Professional Engineer, MBA, over 20 years experience in computer industry, 9 years intensive investing experience.
Sorry for the delay, but I forgot to register my vacation stop and when I returned I had trouble accessing your question on the AllExpert site.
I have not been following cnxt in detail but I took a quick look at them. Here are my comments.
Financially they are very weak. Revenue is down a lot but seems to be stabilizing. Margins are miserable. Their balance sheet is not strong with over $700m in long-term debt and not a lot of cash. And their cash flow is terrible.
So I don't have to look much further to give you my opinion. Regardless how rosy the prospects are for a company, or how fabulous its offerings are, if it does not have the financial strength to survive a downturn and is still burning significant cash I will stay away. And I recommend you do the same with cnxt.
There are so many alternative investments to look at in tech. Companies that are financially strong, profitable, generating cash, and also have great prospects once IT spending recovers, that I don't see why it is necessary to take a chance on shaky ventures like cnxt. I guess there is no problem if it is a small investment you are making relative to the size of your portfolio. But that is the most I suggest you consider.
For example take a look at orcl. Orcl just had a pretty bad quarter. But they made over $500 million in that bad quarter. They generated cash and also have around $1/share in cash net of debt on their books. They dominate the database business and also have growth opps in applications and app server software. This company's future is not in question. You might not like its prospects for growth. It is a large company and they just can't grow as much as smaller ones. But the important point is that your investment is relatively safe with a large, dominant, financially strong company like orcl. There are dozens more. A smaller one to look at would be chkp. CHKP is tremendously profitable and generates lots of cash. Small companies like rimm and dclk are flush with cash so they too can last a very long time. They have big growth potential but at present they are struggling. Lots to look at. Financial strength is key.
