MXWL – Story Stock Failure


We highlighted MXWL as a story stock on the edge a few weeks ago. It was not a clear cut short as AMSC, but it had all the makings.

Last night it released earnings. Woops. The only analyst of note on the thing is Stifel, and he cut 2011 non-GAAP EPS to 4c from 30c. Expect the rest of the group to follow suit. The stock is down a mere ~2% at the moment, but my suspicion is this thing is not done moving lower. That lofty $500mln market cap is at risk of being cut in half.

Let’s take a look, shall we?

Sales came in better than expected. “Excellent news!” you say. Indeed, something must be working right on the sales front.

Gross margin improved substantially q/q but in-line with expectations. Interestingly, the supposed growth driver for the company is ultracapacitor sales and segment margins here went down despite a decent increase in sales q/q. That’s kind of a problem.

Opex was not so hot, either, and is the big reason for the miss and lower estimate revisions. THAT is never a good situation. We need to see leverage here, and this report is not showing it. Apparently we need to wait for another quarter…or four.

How was cash flow? Free cash flow was a whopping (15mln), including 2.9mln for capex and 6.7mln for a SEC/DOJ payment. Wait, that adds up to 9.6mln. Turns out there is a 5.1mln A/R increase that management expects back next quarter.

Haven’t we heard this story before? Chinese wind power…wildly increasing sales…increasing A/R…it’s coming to me, hold on…

Oh rats. Slipped my mind. That’s OK, I am sure everything is fine here. After all, none of the analysts are highlighting it as an issue. It’s not like management is a bunch of criminals.

One Response to “MXWL – Story Stock Failure”

  1. Sterne is working a new RBCN report, lowering price target to $00.00. All rumors, as of now.

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