Really getting punished over the last few days and a bit of a gap down to 0.63. Managed to catch a few at 0.635..however I wouldn't be suprised if it keeps going lower for a bit..
The further it falls the more relevant craft's earlier statement becomes, "what does the market know, that I don't".
The growth investors will hold a stock as long as the rate of revenue growth does not slow. When it slows they dump - and the shares of really fine companies can fall sharply because the growth rate falls from (say) high single digit to mid single digit. What are objectively great results can see 25 percent price falls simply because the results do not measure up to the expectations of the shareholder base.
The growth investors don't much care about earnings (they come later). But they do care how big the eventual market becomes.
A recent example of a fall (which may or may not be justified) is Amazon who were seen missing lofty expectations for Christmas sales. [The sales numbers were fantastic, just the expectations were more fantastic.]
A fallen growth stock doesn't become fashionable again until it has a lower-than-market price-earnings ratio where it attracts "value investors". Value investors have a different agenda. They want the business run for cash and maybe for buybacks. Shareholders will pressure management to meet their expectations. [Example: Apple.] If earnings fall or buy-backs slow these shareholders are disappointed.
Below the value investors - and mentioned in later tweets - are the Ben Graham style bottom feeders who get really interested when the stock is trading at half cash. Whereas traditional value investors want the business run for cash the true bottom feeders want the business closed for cash. Zynga at bottom was borderline of interest these investors.
Outside this are the arbitrageurs that just want to rent the stock for a short term deal. No deal and they are disappointed.
This is a generalization. But being a non-conformist at heart I want to look at the places between - stocks dumped by growth investors for example before they become interesting to value investors - or stocks that are approaching Ben Graham levels but still have viable businesses.
Could this be someone seeing a bigger trend that some people may not pay attention to.
IBM been laying off a lot of IT staff in Australia because there isn't much work around and their IT outsourcing revenue is in decline, they look to restructure and shake up a bit and you guess where their focus is CLOUD ...they looking of getting rid or do with a very small IT outsourcing arm
If this happen to IBM could that mean smaller companies write down and decline revenue are next?
Smaller companies that were growing at a much faster rate than IBM have already taken a hit to revenues and margins. DWS, SMX, ASZ, DTL all included - and I acknowledge some of these aren't big on IaaS.
That's not to say that it may not continue for a while, but the small caps are in line, if not ahead of larger companies, as it's easier for them to make appropriate restructures... AND their service is much better than IBMs (I work directly with them, their cloud offering is horrible).
Even Gartner agree with me:
http://www.nvizor.com/?attachment_id=1676
If this happen to IBM could that mean smaller companies write down and decline revenue are next?
IBM reported its 8th quarterly fall in revenue in a row last night...and hardware sales were again very weak.
DTL is leading the asx IT sector down as a result, certainly did not think I would be seeing this with a 5 in front of it so soon!
Those clouds are getting mighty dark.
I know everyone is all doom and gloom at the moment but do you honestly believe earnings have dropped 60%
in line with the share price. I think there is a bit to much over pessimism in this sector in general.
Hmmm, I tend to see a whole heap of potential for variable cost management in people businesses than mining services stocks that are more likely to have heaps of idle equipment (that either sits at low utilisation or needs to be sold to pay out leasing commitments).IT service is similar to mining services, you have high cost based, very high personnel cost when the
good time rock on you dont see it, when revenue slow you see big drop in profit.
IT service is similar to mining services, you have high cost based, very high personnel cost when the
good time rock on you dont see it, when revenue slow you see big drop in profit.
And when time is tough business do exactly like what BHP and RIO do cut back on IT spending and only run core services... New projects and stuff will be put on ice, small guys with high debt is the first to go, the strong one may linger but not making much etc...
Up 10c this afternoon, on big volume. Fundie buying up? Look out above.
even more puzzling, the rally comes a day after a rather subdued "Trading Update"
DTL isn't a high margin business, it's profitability comes from high asset utilization and internal financial leverage versus its peers. The main part of their business runs between 2-4% EBIT margin over the whole cycle.
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Yes it is nice.Agree Ves, and isn't it nice to have the chance to be able to purchase something at a big discount using the most conservative historical margin forecast..as compared to the usual mid range figure providing something perhaps reasonable at best (as has been the case for alot of the companies I have looked at over the last 12 months).
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