RAK Rakon

[Flying Goat]

TH,

So your point is that we should know but we don't know.

Phaedrus suggested a way that we can find out ourselves.

Thus there is nothing un-excellent about Phaedrus' idea.

TH, do you propose an alternative means of bring the truth to the top or was it just a general whinge about the state of the NZX?

[BigBob]

For what it's worth I sent an e-mail to NZX to express my absolute disgust with the fact that these brokers have not been named...

Unsurprisingly, I have not received a reply, but maybe if everyone else sends them an e-mail or snail mail they'd get the message that this is just not good enough!

[BigBob]

TH, I sent my e-mail very soon after I first read about it on the NZ Herald's web-site... I think it was Wednesday morning...

[BigBob]

TH, not at all - you did after all articulate it here... I didn't think of doing that :o)

Anyway, as I said - maybe a large number of complaints will make them change their minds (I doubt it tho...)....

[Hoop]

A bit more pressure put on the NZX to disclose the culprits

http://www.stuff.co.nz/4120703a13.html

[craic]

If you know with certainty the name or names of the firms fined, you may publish it here without comment and without fear of repercussion. It's only a problem if you get it wrong or make comments that could be challenged.

[warthog]

The hog suggests people here ask their broker whether it was them or not, and publish the responses here. Something like "I asked xyz and they said abc".

Then when it does come to light who the broker was, it will be laid bare for you to see whether or not your broker was straight with you or not.

Would they dare be economical with the truth and risk being exposed?

[Placebo]

Ooooh! Just wot I like a bit of mystery.

My pick is Mrs Plum in the Broom Cupboard with the Candlestick...:D

[hairdresser]

NZD and RAK

The high dollar should not impact RAK too much, they are currently investing offshore [in USD] so they will not be repatriating much currency into NZD, ie much less than their EBITDA figure. While they will be taking a paper hit on profit, in terms of cash it should not affect them too much.

[Bling_Bling]

quote:Originally posted by Hoop

A bit more pressure put on the NZX to disclose the culprits

http://www.stuff.co.nz/4120703a13.html


This is nothing new. Brokers do this all the time. All the good floats is given to their favourite clients and themselves. The small guys get F all. The best way is to have no firm allocation and just public pool where everyone has to bid for the IPO stock.

[a bowden]

Read the other day in the NBR that Rakon has now three offices in China, and is set to announce a move to produce its products in china. Aparently they are to confirm this before the meeting this friday.

[a bowden]

With the depreciating doller how come we have not seen an increase in Rakon. Currently experiencing some sideways movement but we are not far from the trend line. Anyone have any views on Rakon at the momment?

[hairdresser]

Lets see

My guess is it is one of the following 4 options:

1. They have a 60% market share of a rapidly growing global market
2. They have a leadership postion in terms of the technology.
3. They are shifting manufacturing to a low cost production environment.
4. They are listed on the NZX.

Seriuosly though, they are the only company of its type listed here and I just don't think the analysts and instituions really get it. Unfortunately this probably won't change in the near term...

Cheers

[Footsie]

get what

its trading on a massive p/e and sure growth is good, but not that good.

plenty of other tech coy's out there cheaper than RAK


i like RAK, and one day it may well be $10
but right now its expensive

[hairdresser]

Footsie you obviously don't get it either. Why am I not surprised.

[Footsie]

hairdresser

You dont have to limit yourself to the NZ market you know

[Toddy]

hairdresser

You dont have to limit yourself to the NZ market you know


Footsie, I thinks that the point............. what is the definition of a NZ company on a NZ share register . RAK would fail on most accounts apart from being founded in NZ by New Zealanders.

What percentage of RAK product is sold to the NZ market???

Personally I do not care what register a company is on.

[a bowden]

My graphing skills are not great but Rakon seems to be following very closely to the trendline, just had a look at the market depth and is their a possibilty the Rak could break the uphill trend line. Maybe someone could please post an accurate graph. Cheers.

[Phaedrus]

AB, Rakon has been in a "trading range" for about 3 months so far - though in this case, the band is too narrow to trade.

A break above Resistance would be a Buy signal.

A break below Support would be a Sell signal.

http://h1.ripway.com/Phaedrus/RAK925.gif

[Jay]

Phaedrus, do you mostly use lines for your charts or just on the forum to make them easier to understand?
I have found it easier to get the highs and/or lows using lines to draw trendlines etc.

Keep up the good work in any case.

[Phaedrus]

The charts that I post are mostly cut-down versions of what I use myself. If you try to put too much info into posted charts they can get very cluttered.

[hairdresser]

Thanks for the picture Phaedrus.

Are you still trading on the US markets?

I'm having my best month yet on the NAZ. I currently am holding 3 in the money trades and 2 out of the money trades.

AAPL and GOOG are pretty strong at the moment but I am mainly trading the semis.

[hairdresser]

PS this link sort of explains why I like RAK.

http://www.cnbc.com/id/21013917/

ie phenominal growth potetential for moble devices, google maps etc

Plus the 60% global market share and technology leading position for RAK.

[Alkie]

It's a pity I work there, means I can't share what I know ;)

[winner69]

It's a pity I work there, means I can't share what I know ;)

Do you have many RAK shares yourself

[a bowden]

He is bound to have shares under the employer scheme. He's been scared off so probaly wont reply. The only hint of information that we can gather is the 'wink' at the end. At least its not a sad face. Alkie if your out their and to shy to reply just reply is face language.

[Alkie]

No, this was not an invitation to probe, or an act of shyness in not replying.
I am on the road a lot so don't get a lot of time to look at these boards every day.
The main reason for writing this is it's sort of like when you know the answer to a riddle and everyone keeps guessing, but you can't tell. I have read some of the comments on this thread, and just find it interesting, sometimes funny, to see what people outside the company think.
Take from it what you will, it's all fun and games.
Oh and the wink - meant nothing by it, so I think that is being read into far too deep

[Codfish]

It's a pity I work there, means I can't share what I know ;)

Take from it what you will, it's all fun and games.

Are you saying you enjoy playing games with other peoples money?

[Hoop]

Quote from Alkie
...The main reason for writing this is it's sort of like when you know the answer to a riddle and everyone keeps guessing, but you can't tell. I have read some of the comments on this thread, and just find it interesting, sometimes funny, to see what people outside the company think.
Take from it what you will, it's all fun and games.......

When the company gives out only limited information, us investors have to invest our money through good faith and to deduct from what limited amount of information we have been given from, the market place, commentators, rumours, and other outside sources, together with what the official information the company gives us.

Often when analyzing all this data to get a meaningful deduction, if a part of the data is wrong we will usually get an erroneous deduction to some degree....I don't find this particularly funny as money can be lost if the deduction is seriously flawed.

As you claim to be an insider Alkie, I find your attitude to all investors disturbing, not to mention the risk you take by posting cryptic comments on an investor forum which can be taken in many such ways.

It may be funny and games to you but to some people through their investing, it is their only income, whether it be a trader, Mum & Dad passive investor, or Superannuation account.

I think you should learn to respect all markets and the people involved within them....because without markets your job wouldn't exist.

[macduffy]

I'm with Hoop here.
The last thing this site needs is insiders making cryptic comments.

Disc. Not holding.

[craic]

With $60,000 invested in RAK I am happy to hear from Alkie or anyone else who tells me that "Gods in his Heaven and alls well with the world" - at least his world. If you lose your shirt listening to other peoples advice then look at it this way - it wasn't really your shirt in the first place. Hoop and Mc duffy - lighten up, there is more fantasy here than at Walt disney,s studios.

[hairdresser]

Link for Nokia purchase of mapping software NAVTEQ compnay.

http://www.bloomberg.com/apps/news?pid=20601087&sid=awxUeoUoVy3o&refer=home

[Toddy]

Link for Nokia purchase of mapping software NAVTEQ compnay.

http://www.bloomberg.com/apps/news?pid=20601087&sid=awxUeoUoVy3o&refer=home

This is exactly why one cannot put a real value on RAK. If one was to 'speculate' then $100 per share within five years should not be ruled out.
RAK is caught up in a market that is so 'not New Zealand'.

Exciting...... you bet yah.

[Placebo]

Toddy: The other thing that makes it difficult is knowning exactly who Rakon's customers are. They don't detail this in their annual report (well, the one they have made to the NZX ;)) They give an indication of production volume from their end, but are we to think that if you smash open a Nokia or Motorola or TomTom product there will be a Rakon device in it?

What is Rakon's global market share of the products they specialise in?

The question I am asking is: All very well to point to trends in hand-held devices, but what slice of the pie will come RAK's way?

[shane_m]

Alkin is probably one of those underpaid engineers who works for Rakon / Fisher and Paykel etc

Motorola is one of their biggest customers, they sell loads of xtals to them. Motorola keeps buying of them as they have the ASIC temperature controlled ic that fine tunes the xtals. Other manufactures are catching up to this technology.

[shane_m]

the new GPS transceiver will make this company big, if they stuck a big deal with one of the phone manufacturers as it GPS is compulsory from 2010 in all mobile phones.

http://www.rakon.co.nz/whatsnew/display?article_id=-130&template=news

Other than that as per my understanding margin on xtal products are dropping as there is lot of competition from Asia for tcxos, vcos. They have dropped few products lines as they were not profitable anymore. Rakon source dropped products from 3rd parties for interested customers.

[Placebo]

Perhaps Alkie could say who exactly Rakon sells to? I can't imagine this is commercially sensitive -- only the financial details of those arrangements would be.

Or is it the case that Rakon sells into a wholesale-type arrangement and its bits and bobs end up in lots and lots and lots of different makers' products?

[Hoop]

Been nervously :(:( watching RAK lately flirting with it's long term uptrend line..
Intraday price I know but at 492 cents has just nudged above it's 3 months trading range of 470 - 490 cent. I am now slightly more :):)

Disc: Hold RAK

Edit: 1/2 year results due early next month

[Toulouse - Luzern]

Hi Hoop,
I have been watching RAK too - to me RAK is looking better now
the industry trend is good with nav phones
Question is when the big growth kicks in over the next few years who will get the big contracts and $$$
Like the All Blacks there are no guarantees but RAK is in with a show

[craic]

This may sound crazy but I spent hours yesterday looking for a cheap gps that would function in Hawke Bay (on my boat) then I realised that I have 12,000+ RAK shares and maybe one of you know. A - will a car system work with a marine card/chip? or do I have to pay about $1,400 for the cheapest one from a boat shop? Bit off the subject but its 5.50am and the day is dragging on. Email will do.

[Placebo]

Hi Craic,

Yes a car one will work on the boat but the `street finder' function doesn't work so well out at sea. Keep the boat on the trailer round town, it'll be fine.

Cheers

Placebo

[a bowden]

RAKONS RESPONSE TO THE NOKIA / NAVTEQ AQUISITION (NOTE THE BIT THAT SAYS THEY ARE USED IN THE BLACKBERRY AND 'USED' TO BE WITH NOKIA)


Nokia deal hastens GPS for cellphones - Rakon
By TOM PULLAR-STRECKER, AP - The Dominion Post | Monday, 8 October 2007

Rakon says Nokia's US$8.1 billion acquisition of US-based electronic mapping firm Navteq may mean GPS transceivers find their way into more cellphones faster, creating a larger market for its precision crystal components.


Marketing manager Justin Maloney says the takeover shows that Nokia expects to incorporate mapping applications into its cellphones as part of its core business.

"That is very good news for the entire location-based services industry. It is going to encourage a lot of other hardware vendors to start taking it seriously.

"It reaffirms what we and a lot of other people have been saying – that location-based services is just a matter of 'when' – and I think the 'when' just got a lot closer. We are feeling pretty buoyed by it."

A trailblazer of the digital map business, Navteq produces the maps and software found in car navigation systems, portable navigation devices made by Garmin and other companies and Internet map sites. Founded in 1985 and profitable since 2002, it has 3000 employees in 30 countries.

Analysts say the Navteq acquisition is likely to bring forward the day when GPS-capable cellphones are widely used by consumers.

"This cements Nokia's push into navigation," says Mark McKechnie, an American Technology Research analyst.

"As the leader in the cellphone business, they want to see more and more functionality get into the handset – taking the turn-by-turn directions, for example, and moving them from high-priced car applications to applications that fit in your pocket."

Research firm Ovum says Nokia's vision is "very ambitious".

Rakon is reported to be supplying components to Research In Motion for use in its GPS-enabled Blackberry 8800 phones.

Mr Maloney says Nokia has been a customer of Rakon in the past. Nokia has so far included GPS in a few expensive handsets, such as its high-end N95 smartphone, but Mr Maloney would not say whether these used Rakon's products.

"What I can say is they are a company we are in discussions with. We visit them and we consider them a valuable partner. But in the mobile handset space in general, the volumes haven't really been there."

Rakon will begin volume production of crystal oscillators measuring just 2.5 millimetres by 2.0 millimetres later this year, targeting the cellphone market.

Mr Maloney says the cost and power consumption of GPS transceivers are a barrier to their use in cellphones, but Rakon is well positioned with its technology to supply the market.

[craic]

Dick Smith needs to upgrade staff. Finished up getting a Lowrance Global Map GPS 4800 by email (and post) from an outfit in New York for less than half of the price asked locally. DS had a hand-held that I would have bought had the salesperson known what i was talking about. Why is NZ at the top and at the bottom electronically with nothing in between.

[Hoags]

Chart for RAK looking good with a confirmed close and open above resistance at about 4.92. I am in with a CFD long. Entry 5.00, SL @ 4.68, target 5.60.

Any constructive thoughts good or bad on this trade?

[AMR]

Seems to be a fair bit of volume - I would do the same if Marketmaker did not totally confuse me.

[Phaedrus]

RAK has been firing Buy signals since 9/10/07. These are marked by green arrows, with the big green arrow marking the trading range breakout mentioned by Hoags.

The bar graph along the bottom of the chart shows volume. Up days are green, Down days are red. You can see that while volume is slightly above average, it is still lower than other peaks over the trading range.

The signals from the 5 separate systems shown here correlate very well, with both their Buy and their Sell signals agreeing closely.

http://h1.ripway.com/Phaedrus/RAK1018.gif

[Placebo]

Yahoo!

Although my delight is tempered by seeing FBU down a further 2% today. Thus keeping my portfolio in perfect balance...

Why is there always a ying for every yang?? :(

[Hoags]

Great. Thanks for the chart Phaedrus, I tried to post one (albeit with a few less indicators) but I cant seem to reduce a pic to under the 30kb limit without it becoming unreadable. Anyway RAK doing nicely today. Cheers.

[craic]

Had a look at depth and all the pressure seems upwards.

[Phaedrus]

Hoags, If you use .gif images instead of .jpg your file size would be a lot smaller and your chart clearer. The RAK chart here was less than 20kb, for example.

[Hoop]

Yep it's looks like a secondary uptrend has commenced.

Read the reports from the AGM on 10th August 2007. They are positive.

Quote from the MD:
At the time of release of our full year 2007 result we projected EBITDA of NZ$32 to NZ$38 million for the 2008 year. This was based on the assumption of an average exchange rate of 70 cents against the US$, we highlighted at the time that the impact of a one cent movement in the exchange rate could have a full year impact of approximately NZ$1.5 million on EBITDA. Should the Kiwi hold at its current rate of around USD $0.76 then our projected EBITDA range would be $27 to $32 million. Our expectations for the underlying performance of our business are unchanged from the beginning of the year, markets are good, our products well positioned and our people focused on delivering planned growth.

The full year Result 2007 was
EBITDA was up 71% to $20.3m, earnings before interest and tax (EBIT) was up 85% to $16.5 million and earnings per share was up 80% to 9.9cps.
This result was better than expected... quote from 2006 Half year report
The first half result leaves Rakon well placed to meet a full year EBIT forecast of $14.8 million which as we noted at our Annual Meeting in September was a $3 million improvement over prospectus forecast


Copy from last half year report issued 8 November 2006
Amount NZ$000 % Change Revenue from ordinary activities 50,461 +48% Earnings before interest, tax & depreciation 10,135 +194% Earnings before interest & tax 8,539 +226% Net surplus after tax 5,559 +300%

Armed with this data and the fact that the half year result is a little more than half the final result ( December & January are traditionally slow months for RAK).

I will estimate a half year result of EBITDA of $16.5M (+65%).

[a bowden]

Correct me if im wrong, but it seems a little strange that Fisher Funds just sold some of their holdings, in a positive time like this isnt this a little odd. The only reason i can think would be that because the Kfl shares are doing poor that they are scraping profits while they can.

[Zaphod]

There are many reasons why they sell down in companies: For example, sometimes because they need to adjust their portfolio to balance risk levels, or have found another opportunity ripe for the plucking.

Rakon has a fundamentally sound underlying business. I would not be particularly concerned in this particular instance. But it is always worth paying attention to the market. Always.

[Ttops]

:confused:
Correct me if im wrong, but it seems a little strange that Fisher Funds just sold some of their holdings, in a positive time like this isnt this a little odd. The only reason i can think would be that because the Kfl shares are doing poor that they are scraping profits while they can.
Sounds like FF has been selling down over the last few months AB rather than just recently so had to release the notice now as they had just sold more than 1%. It suggests FF think the future is not as bright for this share as maybe something else. If the Kiwi stays high well into 2008 then it limits Rak sp appreciation imo which is currently looking not so certain hence the current sp increase.

[Hoags]

Either way chart still looks good. Good steady volume and nice gradual sp increase.

[Toddy]

Either way chart still looks good. Good steady volume and nice gradual sp increase.

The nice gradual has become a little more nicer.

[scamper]

Yes. Bollinger bands wildly diverging and the shareprice poking through the top bollie.
The 3-month trading range has been shrugged off, the downtrend broken, and other TA indicators confirm positive market sentiment. good stuff.

[COLIN]

Thankfully I acted on the signals he identified.

[AMR]

Resistance level at 530c or thereabouts. From a technical perspective, would it be a good time to increase the size of the position?

Disc : Hold RAK (On paper money unfortunately)

[craic]

I have a substantial holding but I am interested in "resistance level at 530cps or thereabouts" - isn't this the common and usual phenomenon of holders "taking a profit" Many people have, for various reasons, a level at which they sell. I intend to ride this one well past the 100cps if we can get there without a takeover. It must be a prize being considered widely at the present time.

[Hoop]

I have a substantial holding but I am interested in "resistance level at 530cps or thereabouts" - isn't this the common and usual phenomenon of holders "taking a profit" Many people have, for various reasons, a level at which they sell. I intend to ride this one well past the 100cps if we can get there without a takeover. It must be a prize being considered widely at the present time.

Craic I assume you mean 1000cps.

I have the same thoughts as you. Without a takeover and with 60% growth rate at present (prediction) your 1000cps looks very achievable in the medium/long term. The 531cps resistence level was breached with a recent intraday high of 539, so I am assuming that this resistence level is now weak.

I am hoping that the half year results due out in about 10days based on last years date (released 8th Nov last year), will have a positive effect on the shareprice. If not, it will only be a matter of time before it happens.

As mentioned in previous posts the TA is looking good, FA ditto.

This is a classic share for long term investor's portfolios.

[Phaedrus]

Resistance level at 530c or thereabouts. From a technical perspective, would it be a good time to increase the size of the position?

No, it wouldn't. Go back to the main technical reason for buying this stock - a breakout above previous resistance. There is no logic in buying just below resistance, at a level where there has been selling pressure in the past. You might get lucky, but why buy at a time when your chances of success are statistically lower? Fast oscillators such as the Williams'%R shown at the top of the chart show RAK as being "Overbought" and falling - the time to buy is when such oscillators are "OverSold" and rising.

The usual approach is to buy at support, not resistance.
You Sell when support is broken and buy when resistance is broken.

Your idea of building a position by means of a series of purchases is a good one, though. A common approach is to select an appropriate number of suitable indicators and buy a parcel as each indicator triggers. The idea being that the larger the stake you want, the more indicators you would use. If you only want to make a small (single) investment, you would be looking for the general concensus of the indicators you have chosen.

Here is an expanded chart of the breakout. You can see that there were plenty of signals spread over a couple of weeks. That was the time to be adding to your stake - not now when there are no buy signals and RAK might be approaching some resistance.

http://h1.ripway.com/Phaedrus/RAK1027.gif

[craic]

missed a zero in my last post. No edit facility?

[Hoop]

GENERAL: RAK: Rakon Limited: HY Results to be released 19 November 2007


RAK advises that it will make its preliminary result announcement for the six months ending 30 September 2007 to the market at around 8.30am on Monday 19 November 2007.

Following this, a conference call will be held at 11.00am, dial in details will be advised later.

[Toddy]

The RAK SP took a hit just prior to close last night, after a couple of large trades. The pressure has continued this morning. it didn't take alot for the profit takers to get scared.

Maybe a p&l leak.

[scamper]

Am certainly hoping that it closes above 523 over the next few days. -- i do like it when the chart presents a nice staircase of higher lows and higher highs...

Because the breakout was pretty enthusiastic on all fronts, it's a bit tricky to use a trend line to indicate trouble. If you take the very short uptrend as starting at the beginning of October, any close above 505 is 'safe enough'.

scamper isn't nervous yet.

[Phaedrus]

I too am not nervous, Scamper - even if RAK should fall right back to its $4.90 resistance level (which should now offer support).

A break below this wouldn't make me nervous either - it would see me out.

[scamper]

Good heavens! are you suggesting that old dogs should follow their own rules, thus depriving themselves of a good panic....

I never have quite come to grips with selling a share that still has good fundamentals just because its price is dropping -- i know one can buy in again later, but ...

nevertheless, scamper still tries out new tricks. cheers.

[craic]

Seems to be taking a pasting. Does this mean that the figures are out and those in the know are getting out ahead of those of us who must wait for the November announcement?

[Hoop]

Craic, see my #312 post.

I quoted then ....I will estimate a half year result of EBITDA of $16.5M (+65%).

The NZ$ has strengthened a little since then but I still believe the result will be close to that I quoted earlier.

I have noticed that RAK is overseas market sensitive...large falls in the markets last night RAK falls a lot today..to me its no surprise.

I cashed up 15% of my portfolio today RAK was not one of them. Still holding and still happy.

11 more sleeps until the results (19th Nov)

[Malj]

I will estimate a half year result of EBITDA of $16.5M (+65%).

I saw in the last year full year announcement they guided to a $32-38M EBITDA for this year, and that was with an USD of 0.70 I think. So I'd be pretty happy with $16.5 given the beating exporters have been getting on the dollar.

Anyone know what would happen if they readjust the range down given the high dollar? Dunno if it would make much difference if the main business is still strong, not much they can do about the US dollar?!

[KJ]

RAK did say that they had the first 3 mths locked in at US 70 cents.After that each 1cent rise affects EBITDA by $1.5m.

[Malj]

That will help.

Just doing my math. If they said 32-38 and if I assume they have even split of earnings 1H and 2H that would be $16-19M expected for 1H results. If the first 3 months were locked in then thats $8-9.5M "in the bank" and for the next 3 months they take a hit, I make it about 900k a month (0.77c => 7*1.5 = 10.5 => 10.5/12 = 0.875). So thats $5.4-6.9 (8-9.5 minus 2.6).

Total is expected EBITDA of $13.4-16.4M - if everything is going to plan from earlier in the year (also I just guessed the 0.77 for the USD, seems about right from what I've followed though).

Of course this is just idle speculation because I dont know if they have an even split of revenue from 1H to 2H and have no clue on how theyre going to plan. All the press on GPS has been good though so I'm hopeful.

Guess I'll just need to wait until Monday and see.

[Hoop]

Malj

Rakon 1/2 yearly splits are not 50/50. Sales in December and January are traditionally much lower than the rest of the months therefore the HYR result will be larger than the next half. e.g May 2008 full year result may look like 16.0M + 14.0M= $30M.

Also of interest was Brent Robinsons report at the AGM quote...We previously advised a fullyear EBITDA range of NZ$32 to $38 million based on an average US$ to NZ$
exchange rate of $0.70. If the New Zealand dollar remains at its current levels we are likely to see an EBITDA of between $27 and $32 million for the full year."
What the current level of the Dollar he was referring to is not known, but I assume it would've been approx $0.77 as the NZ$ hovered around the 0.76-0.78 level for 2 weeks between 30th July to the 12 August. The Annual meeting was held on the 10th August. A day or two after the annual meeting the NZ$/US$ fell dramatically (high 0.81 on 24th July to 0.68 3 weeks later on 16th August).
So I assume that the NZ$ at 0.77 as at 30th September cross means that the EBITDA will still be at $27M - $32M range.

If this is true then a (very!!!) rough calculation (ignoring allotments etc) of the target shareprice price for RAK using a sligtly lower historic PE(EBITDA (say 28) due to slower growth rate and conservatism (inaccuracies in calculations etc) will be.....
HISTORY
year ended 31.03.07 EBITDA $20.3M. shares issued 127857990. share price (31.03.2007) $4.93 === PE (EBITDA) 31

FORECAST
Year ending (31.03.2008) EBITDA approx$30M. shares say 128M. PE say(EBITDA) 28 Forecast target price $6.55

Target pricing is difficult with RAK as it is a newly listed company and the PE history under the new company structure is very limited.

Using PE (EBITDA) may not be the perferred treatment neither as this is measuring the cash flow aspect of the company only.

Still it is a rather interesting exercise, and fundamentally it is a "must have" stock in my long term portfolio.

[Toddy]

9am Monday boy's.


Maybe it will be the start of a 'good' week.

RAK
16/11/2007
GENERAL

REL: 1601 HRS Rakon Limited

GENERAL: RAK: Rakon HY08 Preliminary Result Timing & Teleconference

Rakon Limited (RAK) plans to release its preliminary result announcement for
the six months ended 30 September 2007 to the market at around 9am on Monday
19 November 2007. This will be followed by a presentation by management at
11am by teleconference.

Dial in details, the confirmation code and a web link for supplemental
material that will be referred to during the presentation are listed below:

Dial In Numbers
New Zealand: 0800 603 458
Australia: 1800 097 137
Hong Kong: 800 962 681
UK: 0808 234 8304
USA: 1866 888 7010

[craic]

Sorry Folks - down 48 cps. Thats a few grand out of my back pocket.

[Placebo]

Wow, big hit.

Result is okay, some serious headwinds with the high NZ/USD cross. There's also some other difficulties in France (700k hit), the impact of IFRS standards and an indication FY profit may not meet market expectations:

However Rakon's operations in
France have posed a particular problem where the manufacturing and logistics
performance has not been able to keep pace with the very strong customer
demand. Since the Annual Meeting this situation has been thoroughly reviewed
resulting in a further charge of NZ$ 0.7m to cover for scrap inventory.

and...

Rakon's FX cover is well within its policy limits but despite this conditions
may compound to make it difficult to achieve the forecast range mentioned at
the Annual Meeting of EBITDA NZ$ 27m - 32m.

[scamper]

Revenue from ordinary activities +78%
ebitda +22% -- a long way from your anticipated 65%, Hoop
net profit after tax 5%.
all a bit sad really.
How are you feeling about its prospects, Craic?
Scamper's hoping that this young company is just passing through the terrible twos.

[Toddy]

Lets hope that the management have the 'expertise' to sail its way through the challanges that lay ahead.

The market should settle soon...... I hope. Between RAK and the IFT writeoffs announced it has put a dampner on my holiday in Surfers Paradise.

I'm logging out now and off to the beach to try and forget about my short term hit.

[KJ]

Looks like this has a way to fall yet with NPAT maybe similar to last year and a PE above 40.With EBITDA for the 6 mths of $12m,full year looks more likely to be in the $20m to $25m range given that the first half is stronger than the second.

[Toddy]

I'm out, have dumped my 35,000 share holding this morning. It really hurts for sure as I was showing a nice profit over the last few weeks.

RAK have a fantastic future, sales growth etc. But they are another FPH as far as trying to manage their way through the currency storm. If the currency does not drop off then we could see RAK at todays level for some time, despite their sales growth.

The stop loss has been executed.

Ooch.

[Hoop]

Revenue from ordinary activities +78%
ebitda +22% -- a long way from your anticipated 65%, Hoop
net profit after tax 5%.
all a bit sad really.
How are you feeling about its prospects, Craic?
Scamper's hoping that this young company is just passing through the terrible twos.

Scamper what can I say :o:o:o a part from (unmentionable).
This result should've been forewarned to the market. Craic your post on the 8th Nov was spot on....sounds like there could have been some insider trading going on.
Bugger the terrible two's... I have sold my 6000 shares. Taken my loss and moved on.
I am a long term investor by nature but I must admit I haven't many long term investments left in my portfolio, things for me are going pear-shaped at the moment :(...been cashing up a lot this past week.

[Stranger_Danger]

Far out, Carmel must be having a pretty crap month so far.

[Hoop]

They say a week in politics can be a long time....ain't got nothing on RAK
TA charts looked really good 3 weeks ago...today :p

Disc: Yesterday, this was a stock I thought I would be holding for a long time (many years)......sold today!

[Malj]

Bit of a fast drop!!

I was a bit disappointed in the result but I didnt think it was as bad as everyones making out.

The revenue would have been up 32% on last year if it wasnt for the US$ and EBITDA of $17m, damn weak US$. Also it looked like was over a mil of "1-offs" in there so not too bad for me (Im in for the long term). They cant control the currency.

I heard on the conference call they were talking about going into India as well for some of the problem stuff out of France, that should help the bottom line for that operation.

Also I picked up that they were still talking about achieving >$27m for the full year (but that it would be tough with the kiwi so strong).

I saw someone talk about the terrible twos, for a company 40 years old I would of thought theyd be well past that. Im picking its still good for the long term and just needs the currency to settle down and stay the same for a while... Anyone know if they could report in US$??

[tobo]

... Anyone know if they could report in US$??

What do you mean?
Do you mean simply express their sales etc etc figures in USD but still convert them too, or do you mean actually retain the profits in US and not bring them back to the NZ-owned company?

[Malj]

Sorry. What I mean is just not translate them to NZ$ but still bring them back to the NZ owned company. I guess all their overheads in the Auck factory are in kiwi but they probably buy and sell all materials in US$ and I imagine that they've got USD bank accounts. I just wondered if its an option to not translate it to kiwi for reporting, sort of remove a chunk of the USD affect??

[stevo1]

great buying for insto's funding with kiwi saver dollars and longer term outlook.

[ratkin]

trouble is all these growth stocks have been priced for perfection.

Time to go hunting for neglected low P/E material , not that there is much about

[Malj]

Rakon 1/2 yearly splits are not 50/50. Sales in December and January are traditionally much lower than the rest of the months therefore the HYR result will be larger than the next half.


I know you've sold Hoop but I was, for my own purpose, checking this up today. Last year RAK actually had a better second half of the year than the first, but results looked flat to down because of FX. A friend at the business paper tells me they did first half at under 65c USD but the second half over at 70c, I'm trying to find that in their report but cant see it though :confused:.

So I'm hoping that the currency will stay the same (or go down) and they'll come through with a good run to the finish to the year and still get over that $27m mark. If they do I'll be happy, if not I might have to join you in selling :).

[Toddy]

Well, my day got even worse after selling up this morning.
I was pushing my boy along a footpath in his buggy here in Surfers and managed to get a stick poke 2 inches into my foot. Off to hospital I went with blood everywhere. The doc said that I was lucky as it missed all of the nerves. But, the hole is about the size of a one cent piece so I am laid up on drugs. And NO swimming.

So much for predicting a good week for me this week.

RAK will recover, but whats the point owning a stock going sideways for the next six months.

[bermuda]

Well, my day got even worse after selling up this morning.
I was pushing my boy along a footpath in his buggy here in Surfers and managed to get a stick poke 2 inches into my foot. Off to hospital I went with blood everywhere. The doc said that I was lucky as it missed all of the nerves. But, the hole is about the size of a one cent piece so I am laid up on drugs. And NO swimming.

So much for predicting a good week for me this week.

RAK will recover, but whats the point owning a stock going sideways for the next six months.

Toddy,
That is not good news.Hope you recover quickly.

[tobo]

Sorry to hear about your foot Toddy.
Does this give us a new indicator against which to gauge the RAK recovery? The Toddy foot recovery index.

[Hoop]

Me too Toddy, hope it doesnt upset your holiday too much.
I bet Toddy's foot recovers quicker than RAK ;)

[manxman]

Well, my day got even worse after selling up this morning.
NO swimming.

So much for predicting a good week for me this week.


Sorry Toddy. The risk of tropical infections. Stuffed up my last sojourn in Fiiji by stuffing my head into a squash court wall and six weeks with no swimming. But it could be worse - think of Carmel.

Mx

[ratkin]

Carmel needs Ryman to come up trumps, by far the biggest holding of KFL

[a bowden]

What are peoples thoughts on the chances of this stock over reacting? Massive drop again this morning, surely things are not that bad.

[mondograss]

Things are nowhere near bad enough to justify the current exodus. Still a good company with excellent prospects, strong revenue growth, and if a 700k inventory write off is the biggest problem they've had with that French acquisition then frankly I think they're doing pretty well. I'd say it's a bit of a bargain now to be honest.

[Hoop]

What are peoples thoughts on the chances of this stock over reacting? Massive drop again this morning, surely things are not that bad.

My observation over the last few months has shown that RAK reacts badly to big fall of overseas markets, and bounces back with their rises.

The $64 question is....how long is this present overseas markets lead secondary correction going to last and how deep is this secondary correction going to be.

The good news is that when the secondary correction ends RAK could be oversold and a good bounce may happen.

TA will show when to buy in I guess.

[mondograss]

Wait for the Xmas sales data, big consumer GPS sales will have a nice flow-on.

[Placebo]

Hmmm, a near-enough 20% drop in 2 days... Oversold?

It's only a loss if you sell... time for that hold 'n hope strategy to kick in ;)

[Hoop]

Quote from FYR report May 2007Managing Director Brent Robinson.
At the time of release of our full year 2007 result we projected EBITDA of NZ$32 to NZ$38 million for the 2008 year. This was based on the assumption of an average exchange rate of 70 cents against the US$, we highlighted at the time that the impact of a one cent movement in the exchange rate could have a full year impact of approximately NZ$1.5 million on EBITDA. Should the Kiwi hold at its current rate of around USD $0.76 then our projected EBITDA range would be $27 to $32 million.

Quote from HYR report Nov 2006.... Further improvement in earnings above this target will be dependent on the extent of the normal seasonal dip over the next couple of months.

So there is a 2 month dip over the Xmas period and the $27-$32 million target will probably not be meet now, especially with a $12.4m recorded in RAK best 1/2 of the year.
So they publically blame the $NZ but it seems as this is not the real reason for the below $27M target forecast as the NZ$ is still at 76c.

Some possible reasons from the 2007 HYR report could be
Slow down in cell phone global growth
Current cellular GPS performance is not great and will need to improve before widespread adoption
Demand is expected to ramp up in 2008 although exact numbers are unknown
Strong demand and Rak well positioned
Focus on the increase capacity at reducing costs to maintain competitveness
Previous guidence of $27-$32m difficult to acheive given the $US weakness.

A copy of the Report (PDF) can be obtained ..email to lcr@nzx.com I couldn't see it on the RAK website before. might be there now.

[KJ]

What are peoples thoughts on the chances of this stock over reacting? Massive drop again this morning, surely things are not that bad.

This stock could easily fall a lot more yet.Think about it...PE is still over 40! Fine when the coy is growing quickly but this seems to have stalled with NPAT looking similar to last year.Is ebitda in the $27m-$32m realistic given the first half & US dollar-$20m to $25m looks more realistic.First half usually stronger than Second half.

[Malj]

First half usually stronger than Second half.

Actually its the other way around. Second half is stronger than the first. Last year first half was only stronger because they were using a very good FX, the second half was a much worse FX rate.

According to Brent Robinson October/November are their peak months with December/January usually being slow. The reason they were vague last year is that they didn't know what retail sales would be like over Christmas and those sales dictate their Feb/March sales. Retail for GPS is slow Rakon's sales are slow in the run to year end, inverse is also true.

On the conference call they were asked about the range and seemed to me to be saying they expected to hit the bottom end of the range as long as there were no adverse currency movements or unexpected slow down in sales.

I'm still looking at the overall revenue and underlying cost base. Revenue has grown a lot but they haven't been able to translate all that into profit. They try to explain why in the NZX release giving lots of detail but I had to read the damn thing about 6 times for it to make sense.

I'm still pretty disappointed in the result, wondering if that UK/France business was a good buy or not? Get the impression without it the numbers would have been much better (costs of global integration, stock write off, etc...).

Guess I'll just have to wait and see. I guess if they know they're going to miss the target range they'll have to advise the market? I might just ring them and ask that...

[Malj]

I rang but got told their CFO and CEO are away until tomorrow and the other IR guy wasnt there... never mind have to try again later...

[Footsie]

Sold out a wee while back over $5.

I ask you all

WHY HOLD a stock that is on a massive p/e and has just revised DOWN its earnings guidance.

plenty more fish in the sea

[Toulouse - Luzern]

Like Footsie I exited RAK at around $5.30 after watching the charts like a kahu

The coy was valued very high on what turned out to be a very small profit.
The market info was a bit vague sort of "the big names may buy" to support the PE
The US NZ $ rate was a significant risk

There was also a big technology risk as technology professionals expect each contract to be less and others may catch up

The UK France thing (with the advantage of hindsight) is another risk just now - if production is now moving from France & Morocco to India - may be just too fast, too many time zones, too many translations and cultures for a $5m profit Kiwi coy.

On the other hand smart technology, a lot of shares have changed hands and the PE is now down so keep watching the SP and TA ...

[craic]

Having dropped about $12,000 on this stock in the past few days, I have more than a passing interest.

Weeks ago I went on the net for a GPS/Chart plotter for my boat and finished up buying a Lowrance System from a New York company. It was less than half the local price. Few days later, got a big SORRY notice to tell me that they were NOT allowed to export Lowrance outside the USA. But - I could buy it and get it sent to a US address etc or they could supply any other make. Finished up with a Standard Horizon Chart Plotter, still half the local price. The unit was made in Italy, not China, for a Canadian firm.

I am intrigued by this "only for sale in US" and all the other commercial stuff that goes on. Why are US sales so important to these firms? Why do we have to pay through the nose for goods that others can get for half the price? It cannot be anything to do with distance or transport costs - I got my stuff here in less than seven days and the all-up cost, including UPS transport and GST was half the local price.
if there is that much profit in this technology, why are the Chinese not leaving us for dead?

[stevo1]

it appears insto 's still hoovering stock from small shareholders with short view despite current circumstances and p /e

[Footsie]

Steveo

WHy? why are insto's hoovering. They must be dumb.

Long term? How long is long term?


It's like the fund manager who is buying up "cheap" CCP. after the profit warning.


If yuo want similar technology exposure why not buy ARR.asx
Much more reasonably priced relative to their potential.


I could site umpteen more examples of why you should exit companies on high p/es that issue profit warnings.

But hey, its your $$ do with it as you wish

[stevo1]

Steveo

WHy? why are insto's hoovering. They must be dumb.

Long term? How long is long term?


It's like the fund manager who is buying up "cheap" CCP. after the profit warning.


If yuo want similar technology exposure why not buy ARR.asx
Much more reasonably priced relative to their potential.


I could site umpteen more examples of why you should exit companies on high p/es that issue profit warnings.

But hey, its your $$ do with it as you wish

just an observation looking at traded parcel sizes.eg today at 1620 50000 at 435 1621 65000 at 435 just 2 of many examples since monday.i guess they must have their reasons.certainly they are paying more today than yesterday. the p/e has been high for about 10 months prior to annual report.perhaps they see the value in the technology for the future and the fact that rakon hold a large part of the WORLD market.maybe they are dumb fact is it seems they are hoovering

[Dazza]

I have limited access to nzx company charts.

Phaedrus *spelling*, could u pls provide me a chart of RAK.

Im looking for an entry price . dun own any eh. but is interested eh.

[craic]

Its not just RAK. This article appears in todays New York Times.

Ericsson Lowers Outlook for Sales


By REUTERS
Published: November 21, 2007
The Swedish telecommunications equipment maker Ericsson offered a downbeat outlook yesterday for fourth-quarter sales, sending its shares tumbling.

In a presentation to an investor conference in New York, Ericsson, the world’s biggest mobile network maker, said its planning assumptions for fourth-quarter sales were now at the lower end of the range that it forecast last month.

When the company issued a third-quarter profit warning in October, Ericsson said fourth-quarter sales were expected to be 53 billion to 60 billion Swedish kronor ($8.4 billion to $9.6 billion).

The company said the networks market in the United States and Europe had tightened and also cited political unrest in some emerging markets as a factor for the network market.

Shares in the company tumbled 11 percent to close at 16 kronor, having fallen as low as 15.92 kronor, their lowest since February 2004.

Next Article in Business (18 of 29) »

[limegreen]

I have limited access to nzx company charts.

Phaedrus *spelling*, could u pls provide me a chart of RAK.

Im looking for an entry price . dun own any eh. but is interested eh.

Dazza,
Technically, everything about RAK is saying SELL. Big OBV drop, broken resistance, trendlines, moving averages. Until the dust settles, it's very hard to say when or what might signal entry. At the moment it's dropped a ****load, but better to wait for it to have clearly stopped dropping before worrying about a buy signal...

[The Doctor]

'going down'?..m'lard...better believe it a sound coy...well over priced.

[AMR]

Everything looks like a sell to me as well. World markets bearish, Fisher selling out, high kiwi dollar. The dead cat bounce has just ended.

Disc : Short RAK.

[Phaedrus]

Short RAK at 4.28 stop at 437. In hindsight, maybe a bit early for a short.

A bit early? How about a bit late!

Opening a Short position in a stock is not much different to closing a Long position. Either way, the usual approach is to sell when the uptrend ends. The big red arrows mark logical points at which to short RAK. To do so now is a more risky undertaking with less chance of success.

http://h1.ripway.com/Phaedrus/RAK1124.gif

[Ttops]

Top seller in electronics in first hour of Black Friday?

GPS

http://www.cnbc.com/id/15840232?video=598561824

[AMR]

Either way, the usual approach is to sell when the uptrend ends.

I was actually going on this statistic in Thomas Bulkowski's Encyclopedia of Chart patterns.


Between 67% and 75% of stocks showing a DCB (Dead Cat Bounce) will drop below the event low after the bounce ends. Between 38% and 61% of the stocks exhibiting a DCB will suffer another 15% or larger decline in the next six months

[Yossarian]

great 20/20 hindsight graph there Phaedrus...

'how could i be so stupid, of course i should have sold the day before the results came out!'

disc: hold none

[Phaedrus]

Hindsight, Yossarian? Nah. This was simply an update. Look back at the charts posted on pages 13, 16, 19, 21, 22 etc and you will see the same indicators with the same time periods featured repeatedly. The signals they produce are there to be observed by anybody. These indicators, parameters and systems were in place before the signals were generated.

'I should have sold the day before the results came out!'
Some people did. In fact, selling pressure was such that RAK was in a confirmed downtrend several days before the announcement.

[ratkin]

Mr perfect strikes again , and yes it is hindsight, the chart was posted after the event. If you had turned up and oposted the chart just before the fall then i would of been the first to say well done.

[Phaedrus]

Ratkin, I posted the chart because Dazza asked me to - and to show xxamr_corpxx that, technically, now is not a logical time to short RAK.

Can you not see that most of the buy/sell signals on the chart have been automatically triggered using indicators and parameters that were set up and posted on this thread months before?

[Lizard]

Hi Phaedrus, I have trouble reconciling the chart above with your own post on this thread of 6 November:


I too am not nervous, Scamper - even if RAK should fall right back to its $4.90 resistance level (which should now offer support).

A break below this wouldn't make me nervous either - it would see me out.

It seems to me that the post was made a couple of days after that short term trend break you have marked (close of $5.35).

I reviewed the RAK thread and chart post fall to see if TA would have given enough warning to exit the trade profitably. My conclusion was that although the short term trend was broken in both trend-line and OBV, (had I held) they probably would not have been enough to get me out - definitely not fully out unless it was a stock I already wanted to sell.

The triggers on the RMI and Slow Stoch didn't appear to happen until the day of the fall - so if you were selling on the close, it would have been a losing trade at $4.50.

Since I admit to having failed T.A. 101, I expect I've probably over-looked some vital clue though. :confused:

[ratkin]

Hard to tell on the chart but it looks to me like the stochastic and the other one (sorry cant see it) were triggered by the fall , might of let you escape at about 4,80 if there was a buyer to pass thm onto

[Phaedrus]

My post of 6/11/07 was made at 11.26 am. The trendline was not broken until the end of the day when RAK had gapped down, closing at $5.35. Only bearish holders would sell on these signals.

Confirmation came 2 days later on 8/11/07 when RAK again gapped down and the OBV trendline was broken ($5.15), though technically, the uptrend was still intact.

The uptrend ended and RAK began a downtrend on 13/11/07 when it made a lower low after a lower high, closing at $5.10. You would need to be very bullish indeed to ignore the combined weight of these sell signals.

Since the big drop did not happen until 19/11/07, there was plenty of time to exit RAK at prices ranging from $5.10 at worst to $5.22 at best.

[ratkin]

I too am not nervous, Scamper - even if RAK should fall right back to its $4.90 resistance level (which should now offer support).

A break below this wouldn't make me nervous either - it would see me out.


Is this the post you refer to? Seems to imply that you would only see a technical sell if it fell through its 4.90 resistance level

[Lizard]

My post of 6/11/07 was made at 11.26 am. The trendline was not broken until the end of the day when RAK had gapped down, closing at $5.35. Only bearish holders would sell on these signals.
The close on 5/11/07 was $5.38. The high volume selling was pointed out by Toddy and you were responding to it. Your marked trend break appears to be well above that and certainly the gap down to $5.30 had already occurred by the time you posted the next morning. But I'll just assume you weren't bearish at that point.


Confirmation came 2 days later on 8/11/07 when RAK again gapped down and the OBV trendline was broken ($5.15), though technically, the uptrend was still intact.

The uptrend ended and RAK began a downtrend on 13/11/07 when it made a lower low after a lower high, closing at $5.10. You would need to be very bullish indeed to ignore the combined weight of these sell signals.


Yet all of this happened on unalarming volumes and seems very similar to the beginning of many long term uptrends where a short, steep uptrend retraces to form a longer term trend. For example, below is your chart of the previous RAK uptrend. What are the factors that would have kept you in that for the long term when it also showed a similar pattern of behaviour early on? I know you have talked in the past about giving stocks "room to breathe" in the early stages of an uptrend and it's a point where I seem to make my worst trading errors!


http://h1.ripway.com/Phaedrus/RAK522002.gif

[AMR]

A bit easier with candlesticks. I went through the last two weeks or so prior to the large drop, and I could only see one possible breakaway gap. A slightly bearish sign, enough to tighten stops, but it only occurred 5 days before the huge drop.

http://img255.imageshack.us/img255/8458/raklongislandka9.png

[ratkin]

Medium term traders who as Lizard rightly pointed out like to give a stock "room to breathe" would probably have still been in.

The long term moving average was still rising, the stock was still above its support level.
I like to use equivolume charts which give a good visual indication of important happenings , ie bigger the box the more important. There was nothing to indicate the big drop was imminent.

Leading up to the big drop volume was very light , probably indicative of general market weakness , nothing that would indicate problems with rakon. There was no rush to the exit before the result was published on the 19th.

[Phaedrus]

By 13/11, I had noted multiple Sell signals for RAK. These included but were not limited to :-
(1) Trendline break
(2) OBV trendline break
(3) The uptrend I bought into had become a downtrend.

Some of you seem to doubt that these signals would be enough to act on. They certainly were more than enough for me.

I seem to operate in a different universe to most of you here. While you lot idly chat about 'giving stocks breathing room', 'traders still being in', 'nothing that would indicate problems', observe only 'slightly bearish signs', see 'no reason to sell', note 'unalarming volumes' etc., I am in full"Caution mode" and have been for weeks. In case you have forgotten what this means, (quote) "To me this signals a time for caution, during which all stops are tightened, all Sell signals must be acted on, and buying is prohibited."

I will post an updated NZSX50 chart so you can see what I am talking about. I daresay it will be followed by Ratkin's usual idiotic claim that "it's all hindsight".

[Footsie]

phaedrus

I admire your discipline.
What is your secret? age, wisdom, Martial arts?


Could you pl post an update asx "caution" chart

thanks

[trackers]

and lower she goes.. I'm in

[Zaphod]

Personally, I'll wait for the reversal first. Not quite there yet.

[Phaedrus]

There is no secret, Footsie. Grim experience has been my tutor. I create rules for myself in an attempt to avoid repeating previous mistakes.

http://h1.ripway.com/Phaedrus/AllOrds1126.gif

While some are very close, none of the indicators here are currently at "caution" levels.

[Footsie]

Thanks Phaedrus

Wisdom isn't learned in a day.
A fool and his money are soon parted

Cheers

[Placebo]

My observation on all this is that the speed with which Rakon dropped is what caught all by surprise. It seemed to me that only weeks prior to the result, Rak had broken out of its trading range and was on the up. Then it stalled, then the result, then carnage.

Opps: edited to add: Not ALL caught by surprise. Only those with less discipline than Phaedrus!

Disc: Burned!

[winner69]

As an earlier poster said one would have to be disappointed that the signiicant increase in sales volumes has not lead to an increase in NPAT ..... as suggested there possibly is more to the result then the publicly stated reason of the strong NZD

Whatever they have only made $10M over the last 12 months .... about 8.5 cents a share so even at 420 still on a trailing PE of nearly 50 ..... and future growth prospects seem to be taking a dive.

What doesn't seem to be have factored into most calculations is the impact of the 20% increase in the number of shares on issue ...... on an EPS base the half year result was down on last year ..... and aren't most comapnies valued on some sort of earnings multiple?

The sort of company NZ needs and no doubt they will continue to be a great story ..... but maybe not such a great investment at current valuations ..... like a lot of new listings the real money is made in the first couple of years and then it is time to move on and try to find greener pastures. In this case i was out when the red line crossed the brown line.

[Footsie]

the signs were all there.......... read Phaedrus' last comment.
if yuo are still holding you had no exit strategy


get what

its trading on a massive p/e and sure growth is good, but not that good.

plenty of other tech coy's out there cheaper than RAK


i like RAK, and one day it may well be $10
but right now its expensive


Forbarr recommend that RAK investors reduce their holding. Here are 10 reasons why such advice should be studiously ignored :-
http://h1.ripway.com/Phaedrus/RAK522002.gif
Rakon is in a steady uptrend - an uptrend that shows no hint, no sign whatsoever of any weakening. All of the indicators plotted here are very positive and all lie well clear of current price action. Make no mistake though - this uptrend will end. They all do. Holders should have some sort of exit strategy in place. Without a written selling plan you are blindly holding and hoping, vulnerable to any reversal and the misguided advice of others.
You are on a rocketship but this does not mean that you are going to the moon. You're not. Uptrends can last for years, but they ALL end.

[trackers]

At this price I think RAK's a bargain... I've bought in around $4.10 and will top up as much as I can at that price. Some positive commentary from the recent announcement:

Did you say 78% revenue growth?!

"Total revenue has grown 78% to NZ$ 89.9m compared to the same period last year. EBITDA overall increased 22% to NZ$ 12.4m on the same period. This result takes account of all global business acquired at the end of the previous financial year and the impacts of the globally weakening US$. In particular the high NZ$ to US$ has had an adverse effect."

78% revenue growth... Plus you can't keep up with demand??

"However Rakon's operations in France have posed a particular problem where the manufacturing and logistics performance has not been able to keep pace with the very strong customer demand."

After getting hammered on Forex, we still see good gains on previous periods...

"The unaudited net surplus after tax of NZ$ 5.7m for six months ended 30 September 2007 is up 5% on the same period last year."

Starting a manufacturing base in China to keep up with demand and increase margins? Yes please...

"Business demand remains strong and Rakon's plans for manufacturing in China are in action. It is anticipated that we will be able to report progress on that and other initiatives during the second half of this fiscal year."

[craic]

Seems to be taking a pasting. Does this mean that the figures are out and those in the know are getting out ahead of those of us who must wait for the November announcement?

Why don't I ever listen to the noises in my own head?

[Footsie]

Nothing goes up forever

You have to know when to take a profit

Maybe Rakon will rise again........
why not buy back in then.

[craic]

Footsie, I am aware that nothing goes up forever - BUT - I was commenting then that as we approached the results date people were dropping out - were they people in the know who had an indication that the result was not good. Too often this sign of rats deserting a sinking ship comes in the two weeks or so BEFORE the result is announced. I can't buy back in because I never sold out.

[winner69]

Having dropped about $12,000 on this stock in the past few days, I have more than a passing interest.

Weeks ago I went on the net for a GPS/Chart plotter for my boat and finished up buying a Lowrance System from a New York company. It was less than half the local price. Few days later, got a big SORRY notice to tell me that they were NOT allowed to export Lowrance outside the USA. But - I could buy it and get it sent to a US address etc or they could supply any other make. Finished up with a Standard Horizon Chart Plotter, still half the local price. The unit was made in Italy, not China, for a Canadian firm.

I am intrigued by this "only for sale in US" and all the other commercial stuff that goes on. Why are US sales so important to these firms? Why do we have to pay through the nose for goods that others can get for half the price? It cannot be anything to do with distance or transport costs - I got my stuff here in less than seven days and the all-up cost, including UPS transport and GST was half the local price.
if there is that much profit in this technology, why are the Chinese not leaving us for dead?

Craic ... this may have helped ..... next time maybe

http://www.buyusa.co.nz/

[craic]

Thanks, Winner 69, but I have no problems - usually. Freight is reasonable and delivery is fast. Even within NZ the internet is often the quickest way. I wanted a breathalyzer recommended by the Consumer. Tried Dick Smith, Noel Leeming and others and just got headshakes. Went on the net to the Online Pharmacy in Auckland or wherever. It was in my mailbox in Rural Napier at 8am the following morning.

[Toddy]

Does anyone know if Kingfisher is still selling.

Without any additional news RAK will continue to drift.

[winner69]

Does anyone know if Kingfisher is still selling.

Without any additional news RAK will continue to drift.

....drifting it surely is clsoing today at 375 .... thats some 33% of its highs of not that too long ago


Wonder how long it will drift ..... any ideas Toddy

[AMR]

Wish I had held onto my short instead of getting annoyed at my broker over the spread. Would have been an absolute ripper of a trade.

[upside_umop]

AMR, by saying looking for shorts to balance longs, are you wanting to hedge your current position? Or something im missing?

[AMR]

AMR, by saying looking for shorts to balance longs, are you wanting to hedge your current position? Or something im missing?

I want to be protected against a large fall on the dow jones which would basically cause an NZX-wide fall, if that happens my shorts will protect me from my longs. Basically, I'm looking for a dog stock that seems to be in the early stages of a downtrend. Missed a golden opportunity in CEN (completed a double top a while back at 865...now 830s). Now I'm running the ruler over a few others but nothing sticks out.

[tobo]

so RAK or, say DGL, no longer fit the bill? You think they won't fall sufficiently further in response to DJ fall?

[AMR]

Time to short would be after it rallies but does not violate the last peak as Phadreus says.

I'm really unsure about the market at the moment to be honest. A lot of midcaps started falling six months to a year ago (GPG, SKC, GFF, FPA, FPH etc), the large caps are all ranging (TEL, FBU). Better to ask someone with more experience, this is my first bear market but it is also the first bear market in which the US is being propped up by China.

Market issues aside RAK is also experiencing logistics problems. The question here is, will they be able to sort out this problem in a single quarter? If not, then future earnings may also be subjected to similar pressures.

[Hoop]

A positive spin from NZH today. (http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10483363)

A quote from that article....
...."First NZ Capital analyst Jason Familton said he valued Rakon's shares at $3.82 on a discounted cash flow basis. "[Investors] maybe got ahead of themselves a little bit," he said".....

I have similar thinking as AMR...Rakon's profit slow down after announcing large growth in sales indicates increased competition, increased debt. Startup (France?) and logistic costs seem to be problem areas in need of fixing. Difficult to see these areas being fixed in the short term.

Disc: cashed out, but on my watchlist..maybe a good bet once this financial subprime mess and possible USA recession rumours are over...or a big fall in the NZ$.

[a bowden]

With the stock falling sharply today what are everybody's thoughts on RAK, falling much more than I expected. Is the share still overvalued, or is the dollar the main problem?

Should we be looking to buy at a bargain now, or is their more to go?
With no news from RAK for a long time their seems little reason for it to fall so sharply.

I am still in which is a major mistake, but we all make those. :)

[trackers]

With the stock falling sharply today what are everybody's thoughts on RAK, falling much more than I expected. Is the share still overvalued, or is the dollar the main problem?

Should we be looking to buy at a bargain now, or is their more to go?
With no news from RAK for a long time their seems little reason for it to fall so sharply.

I am still in which is a major mistake, but we all make those. :)

Personally think anything under $4 is a screaming buy... I'm accumulating.

Looking forward to hearing more about how the China production expansion is coming along; onwards and upwards

[Hoop]

Quote from Winner69 from todays PPL thread.....

"Interesting study done in the US found that once a 'growth' rated stock (ie one witha high PE) disapoointed the market over the next few quarters was often rerated as a 'value' stock (ie average sort of PE) but the main point of the research showed that it was rare for these stocks to ever regain a 'growth' status .... meaning future shareprices generally over moved relative to earnings performance (with a PE that stayed around the market average).......

Winners quote can be applied for RAK as well.

DB has RAK's PE Ratio presently at 38....ok it has been around 48-50 until the last financial report, so the market is in the process of re-rating RAK.

Its USA market is looking suspect with a possible recession looming, so I would not be surprised if the market slows and margins are further squeezed.

Therefore RAK is presently in:
a PE Ratio, market re-rating
a sharemarket going into a Bear Market phase
a slow down of it's markets
it's Competition is hotting up

So RAK is caught in a double (quadruple) wammy.

Watch the DOW, most times the DOW has a major down day RAK follows. With the DOW (and NZX) in a confirmed bear market there will be many down days.


AMR is on to it. One part of the Bear Market investment strategies is shorting downtrending stocks.


Disc: sold RAK the same day the disappointing result came out.

[winner69]

I wouldn't write RAK yet off yet HOOP .... the difference from PPL is that RAK still expects to double earnings over the next year (or so) which means that the current PE(although high) is not totally outrageous but does have high expectations built into it.

I don't think RAK is in the process of being rerated from 'growth' to 'value' at the moment ... the current weakness being due to lower than expected earnings in F08.

So the shareprice prob won't move much in the near term until the future performance becomes more clear

But what a change if the expected growth premium goes out of this share .... lets say eps only gets to 15 cents next year ... and rerated down to a PE of 15 .... thats a shareprice of 225

Like PPL the time to be in RAK was post IPO until the market found a the top and then to get out (in my case about 500) .... and then sit on the sidelines to see what happens ..... and at the moment I don't see RAK as a compelling buy .... neither do the charts.

RAK may still have its day in the sun .... just have to be patient.

[trackers]

Quote from Winner69 from todays PPL thread.....

"Interesting study done in the US found that once a 'growth' rated stock (ie one witha high PE) disapoointed the market over the next few quarters was often rerated as a 'value' stock (ie average sort of PE) but the main point of the research showed that it was rare for these stocks to ever regain a 'growth' status .... meaning future shareprices generally over moved relative to earnings performance (with a PE that stayed around the market average).......

Winners quote can be applied for RAK as well.

DB has RAK's PE Ratio presently at 38....ok it has been around 48-50 until the last financial report, so the market is in the process of re-rating RAK.

Its USA market is looking suspect with a possible recession looming, so I would not be surprised if the market slows and margins are further squeezed.

Therefore RAK is presently in:
a PE Ratio, market re-rating
a sharemarket going into a Bear Market phase
a slow down of it's markets
it's Competition is hotting up

So RAK is caught in a double (quadruple) wammy.

Watch the DOW, most times the DOW has a major down day RAK follows. With the DOW (and NZX) in a confirmed bear market there will be many down days.


AMR is on to it. One part of the Bear Market investment strategies is shorting downtrending stocks.


Disc: sold RAK the same day the disappointing result came out.

Nice to have some more input! Can't agree though..

RAKON shareprice has lost 40% (!) off its 52-day high, thats huge. Most will agree that it is due to their 'disappointing announcement' right?

Lets review that announcement:




Rakon achieved a 78% increase in revenue to NZ$90 million in the first half of the current financial year.

This increase over the same period last year was due to the continued rapid growth of sales into GPS applications, as well as contribution from our European business acquired in March 2007. EBITDA was up 22% to NZ$12.4 million when compared to the same period last year. Growth
in both revenue and EBITDA was restricted by the significant weakening of the US$, which impacted all of our global operations, but in particular New Zealand. Globally over 80% of Rakon’s revenues are earned in US$. Rakon seeks to balance this with sourcing as many of its materials in US$ as possible, but a significant proportion of our costs incurred are in other currencies, reflective of the location of our businesses. Had exchange rates remained at the levels they were in the first half of the last financial year Revenue and EBITDA would have grown by 93% and 67% to NZ$98 million and NZ$17 million respectively.


Its disappointing that revenues and EBITDA didn't grow by 93% and 67% due to the exchange rate, but should 40% of the value of the company be wiped away as a result? Personally, I don't think so....

Looking to pick up even more at these levels.

[Hoop]

Hi Trackers

I hope you're right.

You welcomed the input...sorry mine happens to be rather negative..maybe a rub off from reading all the doom and gloom news abroad.

Today is another shocker from the USA with weaker than expected Dec retail sales figures (they weren't expecting great results to start with).

There is a feeling out there and commentators are starting to mention the topic of a sharemarket meltdown. If there is a meltdown or just a more ordinary decline within the Bear market phase, history has it that good fundamentals will not make any company immune to the overall market effects.

RAK is in a downtrend, there are no buy signals yet. Yes, in a Bear Market phase opportunities arise to buy super cheap shares, but Trackers you and I just differ on the value of RAK, you think they are super- cheap, I think they are still ...well not expensive but not cheap either as their investment risk premium has risen.

I am suspicious of companies making a big noise when reporting in EBITDA, I know this is the best indicator to establish cash flow, however I am uneasy about the information not mentioned, such as the all important Company Structure. The information is hard to find in the 2007 report but reading between the lines there is a concern that the company has been forced to grow too quickly, has increased it's debt considerably, has start up problems in France, it's logistics company lines are clogged and need expanding to shift the increasing product flow, and it's lines of communication within it's expanding network needs more efficiency.......To keep it simple this company has the speed wobbles.

Yes the EBITDA growth is spectacular, but it's niche market is getting crowded now as household products now demand faster crystals, and with it comes the competition....lower profit margins, more marketing expense etc.

Call me old fashion but in the end I still believe in that bottom line figure.

Remember RAK shareprice got caned with its latest "good" result in a Bull Market phase..it's next result announcement will probably be in a Bear Market phase.

There is plently of time to buy RAK...so why rush in now..why not wait until the TA buy signals emerge.

[winner69]

There is plently of time to buy RAK...so why rush in now..why not wait until the TA buy signals emerge.

Agree Hoop - as I said earlier RAK may one day have its day in the sun

[trackers]

RAK has been a great trading share for the ballsy lately! from low 300's to early 400's its been all over the place... I got out at even, given the current volatility cash isn't a bad place to be

[Hoop]

Hi Trackers
There was a feeling that mobile phone market was maturing and profits were flattening out, however Nokia forecast (http://www.marketwatch.com/news/story/mobile-giant-nokia-reports-stronger-than-forecast/story.aspx?guid=%7BE066BEDC%2D775C%2D4EFA%2DB116%2 D3A37D2D8E4F1%7D&siteid=bnb)of a 44% jump in quarterly profits released 2 days ago has made commentators re-assess this market.
I guess this is good news for Rakon.

With this bear market rally I thought about getting either CEN, RAK or PPP for a quick flick... opted for PPP:( (0% increase in this rally so far.) In hindsight I should've opted for something a little more liquid.
RAK up 19c today to 398c, mind you the volume traded is low

[trackers]

Hi Trackers
There was a feeling that mobile phone market was maturing and profits were flattening out, however Nokia forecast (http://www.marketwatch.com/news/story/mobile-giant-nokia-reports-stronger-than-forecast/story.aspx?guid=%7BE066BEDC%2D775C%2D4EFA%2DB116%2 D3A37D2D8E4F1%7D&siteid=bnb)of a 44% jump in quarterly profits released 2 days ago has made commentators re-assess this market.
I guess this is good news for Rakon.

With this bear market rally I thought about getting either CEN, RAK or PPP for a quick flick... opted for PPP:( (0% increase in this rally so far.) In hindsight I should've opted for something a little more liquid.
RAK up 19c today to 398c, mind you the volume traded is low

hmm true. I would have loved to top up RAK at 3.30 odd they were at a short time ago (to compliment my purchases at 3.77 and 3.97!) for a ~30% odd gain but I just couldn't get the funds quick enough (Rabo...bah). Lots of opportunities out there I guess

[Hoop]

hmm true. I would have loved to top up RAK at 3.30 odd they were at a short time ago (to compliment my purchases at 3.77 and 3.97!) for a ~30% odd gain but I just couldn't get the funds quick enough (Rabo...bah). Lots of opportunities out there I guess

Yeah me too
I had a number of buy orders in but I too couldn't get them filled quick enough at my price (My buy price was too low on the morning of the rally beginning). I bought PPP at market price, in hindsight I should've done it the other way round (buy RAK & CEN at market price, and my buy price on PPP) It's too late to buy in now, we've missed the bus on this rally...oh well there will be more rallies. I will use this rally as a learning curve for the next one.

[Steve]

Did you consider getting on the bus during this weeks dip?

Or is RAK now a wait & see?...

[AMR]

RAK seems to be in a consolidation pattern at the moment, there is resistance at 3.30 and 4.00.

It's big enough to try a few scalp trades I suppose, but the consolidation pattern is not confirmed yet.

[scamper]

sadly, i think you are over-optimistic here, amr.
if i squint really hard, i can see a couple of returns at 410, and another at 380, but it all looks very downhill to me.
however, from their announcement 19 Nov. (rev +78%, ebitda +22%, net profit +5%) it would seem that there are bright-ish fundamental possibilities.
TAs are well out, but FAs might yet be pleased. cheers.

[Hoop]

Did you consider getting on the bus during this weeks dip?

Or is RAK now a wait & see?...

Sorry Steve ..only just read your post....so I suppose there is some hingsight in my reply.

Nah, RAK for me is a no-go until after the next downturn..too risky now. This latest bear market rally is mature, so it is time for those people who are going to exit to exit now. The long term fundees might be in the market, so is the group who still think the lastest correction to the Bull market has just passed, as the "perceived" fundamentals do look OK at this point of time.

Interesting to see RAK upturn very quickly at the beginning of this rally and suddenly drop drop while the rally was still in progress. This is a classic quick flick one usually sees with a disappointed growth stock in a bear market rally. I will keep an eye one this one at the beginning of the next rally.

[redzone]

Just take a look at what happened to SIRF in the us over the last few days.....WOULDNT TOUCH RAK on that news

[Steve]

What was the news?

[Toddy]

What was the news?

I don't understand alot about the technologies but here is a SIRF report.


Ahead of the Bell: Sirf shares plunge

Shares of microchip maker Sirf Technology Holdings Inc. plunged rapidly in premarket trading Tuesday after the company posted an 89 percent drop in fourth-quarter profit that led at least five analysts to downgrade the company.

The stock lost $6.87, or 42.2 percent, to $9.40 before the opening bell. Closed with bids at $6.55, last price $7.36

Thomas Weisel Partners analyst Heidi Poon downgraded the San Jose, Calif., maker of chips for global positioning systems to "Market Weight" from "Overweight" and cut her price target to $12 from $31.

"The shares would likely be range-bound until the demand picture improves or further traction" is seen in the wireless unit, where there is limited short-term growth, Poon said in a client note.

Poon noted Sirf's first-quarter guidance for a loss of 4 cents per share on revenue of $71 million to $77 million is significantly lower than her outlook for 26 cents per share profit on revenue of $95 million. Analysts polled by Thomson Financial expect, on average, profit of 24 cents per share on revenue of $92.4 million.

Soleil Securities Group analyst Peter Friedland cut his rating to "Hold" from "Buy" and his price target to $10 from $21, saying that Sirf should consider putting itself up for sale.

"At this point we believe the best outcome for Sirf is an acquisition by a larger semiconductor vendor interested in Sirf's GPS technology, strong patent position and leading market share position," Friedland said in a client note.

While GPS technology is quickly becoming a necessary item on cell phones, growth in that area has not been enough to offset commoditization in the portable navigation device market, Friedland said. Commoditization occurs when vendors each sell the same product, but there is no distinguishable difference between them, and prices are pushed lower.

New designs in the cell phone market and the uncertainty about business with Motorola Inc. also present uncertainty, he said.

Also Tuesday, Oppenheimer downgraded shares to "Perform" from "Outperform," Lehman Brothers moved its rating to "Equal Weight" from "Overweight," and Jefferies & Co. lowered its rating to "Hold" from "Buy."

[Hoop]

What was the news?

I have abbreviated this News item from CNN Money (http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-22795277.htm) Click to read full news story.

SiRF Technology shares plummet amid 'uncertain' outlook, analyst downgrades
February 05, 2008: 01:37 PM EST


SAN FRANCISCO, Feb. 5, 2008 (Thomson Financial delivered by Newstex)
The San Jose, CA-based provider of software and semiconductors for personal navigation devices Monday posted a fourth-quarter profit of 28 cents per share, versus the mean 32-cent estimate of analysts polled by Thomson Financial.

Also a forecast an adjusted per-share loss of 4 cents to breakeven and revenue in the range of $71 million to $77 million for the first quarter.

Canning attributed the fourth-quarter results in part to 'late-breaking demand softness from two major customers.'

The San Jose, Calif.-based company's stock fell 53% to $7.60.

[tobo]

Glancing at SIRF's quarterly,
- 07 last qtr compared with 06 last qtr -
Revenue up from $74m to $100m
Gross margin $41m to $53m (down from 56% to 53% so only a smallish change)
Op Expses up from $22m to $36m (so something going on here)
(Therefore op profit down from $10m to $0.2m)

so could that be falling price (therefore falling margins) on huge volume increases? Fits with comment about "Commoditization occurs when vendors each sell the same product, but there is no distinguishable difference between them, and prices are pushed lower."

Does Rakon range suffer this issue to the same extent? How much of Rakon range is more specialised, less susceptible to this. (The French aquisition added low-cost product to range, did it not.)

[Toddy]

Hoop

Can you explain the difference between SIRF and RAK technologies. Are they selling into the same market.

[Hoop]

Hoop

Can you explain the difference between SIRF and RAK technologies. Are they selling into the same market.

Tobo looking at RAK latest results it looks like their margins have been reduced

Toddy I didn't know this company existed until tonight :o. I have been googling away here to get up to speed with SiRF.

From googling, SiRF product area is the making of state of the art semiconductor technology for GPS systems, engine circuit board, GPS software, multi function processors and low powered chips for GPS navigational systems..... from SiRF's Website (http://www.sirf.com/about_sirf/index.html).

RAK product area is quartz technology. The production of various crystal and oscillator components for various applications, GPS systems being one.
It seems Rakon overlaps into the Sirf's product area of the GPS market with news that RAK has developed (http://www.engadget.com/2006/01/12/new-zealands-rakon-develops-worlds-smallest-gps-receiver/)the worlds smallest GPS receiver but generally it make different components to that of SiRF...but in saying this I am not so sure about C-Mac Micro Technology that Rakon purchased back in March 2007 though. It seems C-Mac (http://www.cmac.com/)make modules and chips too so they are in the semi conductor business as well but they produce for a wide range of industries not just GPS markets which SiRF seems to specilise in.

[redzone]

Sirf has certainly been cut off at the ankles....its dropped from $30 odd in the last few weeks....Rakon need to update the market .....this area they produce into is a bit like you need to be in first ...grab market share then sell the company...maybe just to many players now and profits slipping....did own Rak...and was going to buy back in but after reading about Sirf...will wait until RAK update the market....can see $2plus if market share slips

[mondograss]

RAK are much more specialised and although they've invested heavily in developing the consumer GPS side of things, they still make the vast bulk of their money from high-performance quartz for military and aero-space applications. They occupy a niche based on sheer quality and are unlikely to have their earnings seriously dented by softness in the consumer market. Might flatten off future earnings growth though if the softness lasts.

[redzone]

Its all about competion....sure they specialise in the area...but so do others and when our dollar is high like it is against the US....and imports are a lot cheaper for the US companies competing,margins on this side(nz) get hit.....will wait until result and forwarding looking report from company....lot of other gps producers have been smacked as well...we are part of the world now...im expecting the worst although RAK is a long way off its highs and may have suffered enough...buyer beware

[KJ]

P/E over 30 in the current market with dollar against it-unfortunately it can only go one way.

[redzone]

KJ.....correct

[Malj]

Can you explain the difference between SIRF and RAK technologies. Are they selling into the same market.

This is something I know a bit about for once as I have a vested interest in SiRF. :)

Rakon sell about half (or more) of their products (quartz crystals) into GPS applications. A lot of their customers are the same as SiRF's but the respective product ranges are quite different. SiRF essentially make silicon chips which decode the satellite signals and give position. Rakon make a timing reference which enables the silicon chips to work. The better the timing reference the better the silicon will work. So Rakon and SiRF operate in the same sphere but in different parts of the customers circuit board.

SiRF's announcement was a bit of a shock, but a lot of the downside is unrelated to Rakon. IMHO SiRF were over optimitic about how much market share they could hang onto and were bullish about their prospects in the wireless market (cell phones). Reality has come home to hit them. SiRF used to absolutely dominate some market segments (more so than Rakon) and over the last 12 months or so has been loosing some high profile customers, they told the market not to worry because the wireless and second tier PND manufacturers were going to more than make up for it. I had my doubts about this and looks like my concerns were valid. SiRF just can stand up to the likes of Broadcom, TI and STM in the handset space as their underlying technology, I think, is too expensive.

Rakon have been sharing their major customers with their competitors for a much longer and haven't been quite as bullish about the developing markets like wireless.

Having said that Rakon could be exposed to a reduction in consumer spending as I understand a lot of their business from the NZ operation is into consumer GPS markets. Their UK and French operations are more in the telco infrastructure space (if I read their reports right).

I think Rakon are overdue to update the market on their full year expectations and 08/09 guidance!

[redzone]

If that is the case (overdue)I would be a little concerned.

[Malj]

If that is the case (overdue)I would be a little concerned.

Yeah. For some reason I thought they said there would be an update late Jan or early Feb. Its early Feb now and given the SiRF announcement I think they owe us something. I'll get nervous if they haven't said anything in a weeks time or so.

[mondograss]

Looks like Rakon's new micro GPS receiver is starting to find/create some markets:

Rakon sells to camera-maker
By TOM PULLAR-STRECKER - The Dominion Post | Monday, 11 February 2008

Rakon's GPS devices are set to find their way into millions of digital cameras after United States firm Geotate found a practical way to let photographers automatically record the location that digital photographs are taken.


This looks set to create a whole new market for NZX-listed Rakon, with which Geotate has signed a partnership.

Till now, incorporating GPS into cameras has been unpopular because GPS receivers take about 30 seconds to get a fix on their location.

"Nobody is going to say 'Hey, hold that pose for 30 seconds while I fire up the GPS'," says Geotate chief executive Hans Streng.

Geotate gets around the problem by capturing a fifth of a second's worth of raw GPS data when a picture is taken. This can be used to get an accurate fix later, by connecting the camera over the Internet to a server that checks the data against a record of satellite positions.

General Imaging, the newly created camera division of US industrial giant Generic Electric, will incorporate a fingernail-sized GPS radio module made by Rakon into its top-end 10-megapixel camera, the E1050.

Taiwan's Altek, which is one of the world's largest makers of digital cameras, supplying various brand names, will also make GPS-enabled cameras using Geotate's technology and Rakon's devices.

Mr Streng says the technique is the only way that "geo-tagging" cameras will become mainstream. Separating the process of capturing GPS signals from analysing them to get a fix also minimises the drain on camera batteries.

He expects about four million cameras capable of geo-tagging photos will be sold in the next 18 months to two years.

Geotate is a wholly owned subsidiary of NXP, the former semiconductor business of Philips, which employs 37,000 staff and turned over [Euro]5 billion last year. NXP plans to spin off Geotate by the end of March but will retain a minority investment.

The company worked with Rakon to develop its technology, using Rakon's GRM 6510 GPS device. Rakon marketing manager Justin Maloney says the modules are made in New Zealand and cost a few dollars each.

"The number of digital still cameras out there is huge," says Mr Maloney. "We are not expecting to sell them into every one of them, but the potential market is pretty large."

Rakon managing director Brent Robinson says Geotate's system is a real breakthrough for the camera industry. "We are confident that, combined with our module, it will enable geo-tagging solutions to be incorporated into many cameras this year."

Mr Maloney says there is potential for separating the capture and processing of satellite data in other consumer devices, to expand the market for GPS technology. "How wide that is, we are reserving judgment. It certainly is perfect for cameras."

Technology website Engadget, reported Geotate's system was the highlight of the Photo Marketing Association trade show in Las Vegas, where it was unveiled, and that Geotate later planned to use the same principle to GPS-enable items from personal computers and sneakers through to "soda bottles".

[Malj]

Just saw this come on the NZX.

Looks like a good move as they highlighted the French costs were a problem.

Not sure what you guys make of the guidance update. Little bit disappointing I guess but not far of what I was expecting. An extra $3m from the JV and a 18% EBITDA/sales ratio would certainly make for a better result.

Rakon Press Release
Auckland, NZ: 14 January 2008

Rakon to enter Joint Venture Relationship with Centum

Rakon Limited (Rakon) has entered into a Joint Venture (JV) with Indian owned and based Centum Electronics Limited (Centum) to manufacture selected Rakon products alongside Centum’s existing Frequency Control Products (FCP) in Bangalore, India.

The JV has the Bombay Stock Exchange listed Centum holding a 51% share and Rakon a 49% share.

The new company will combine Centum’s existing design and manufacturing capability for frequency control products with some of Rakon’s OCXO design and manufacturing expertise, which were developed and are currently undertaken in France.

Rakon and Centum have entered into agreements which protect the intellectual property rights of both parties, provide Rakon with exclusive rights to sell outside of India all products manufactured by the JV, and Centum with similar exclusive rights within India. The arrangement will provide Rakon with enhanced margins and earnings in the OCXO product range.

When the JV is fully operational in late 2008, and using current year earnings as a base, Rakon’s annual EBITDA is expected to improve by more than NZ$3 million. This is as a result of the improved cost structure and contribution from the former Centum business. After transaction costs Rakon will also book a one off gain on the transaction of approximately NZ$1 million, reflecting the realisation of the gain over book value of assets transferred to the JV.

“Moving some of our manufacturing capacity to India is consistent with the constant evolution of our international manufacturing model and our objective of having a highly competitive, world leading, cost base.” said Brent Robinson, Rakon Managing Director.

“We have a seven year working relationship with Centum through the outsourced manufacturing of our VCXO product range. This gives us considerable confidence that the JV will provide both Rakon and Centum with the opportunity for substantial revenue growth.”

“The formation of the JV with Rakon is in line with our strategic thinking of ensuring that our customers always receive technologically advanced products at competitive pricing” said Apparao Mallavarapu, Centum Managing Director.

“The combination of technology and market access of Rakon, and Centum’s ability to design and manufacture high quality products at competitive pricing will make the JV a formidable force. We are confident that this partnership will enhance the value of both Rakon and Centum”.

The transfer of equipment and manufacture of products will begin in late March and be completed over a six month period to ensure that there is no interruption to Rakon’s customers.

Mr. Robinson said the Joint Venture would provide Rakon with more readily scalable global OCXO production in order to meet existing and future customer demand. He also added that he expected the Joint Venture to allow Rakon to eliminate reliance on temporary staff which were employed in France to meet the sudden increase in demand soon after Rakon acquired the business in March 2007.

“Rakon’s remaining manufacturing capability within France will continue to be an integral part of our manufacturing model. As this JV becomes operational the French team will be able to apply more focus on the things they do exceptionally well,” he said.

“In particular, OCXO product design, SC cut crystal and high specification OCXO manufacturing will continue in France. Our French manufacturing facility is also an approved supplier of electronic components under the European Space Agency and Rakon is committed to maintaining this accreditation.”

Mr. Robinson added, “This initiative is complimentary with the manufacturing options being explored in China. We have a team working full time on that project and they are currently considering two alternatives that would enable manufacturing to commence in China within the next 18 months.”

Rakon also provided an update on its forecast results for the year ending 31 March 2008.

Update on 2008 guidance

Mr. Robinson said, “Our core GPS business will have grown in volume by 50%, underpinning global revenue growth of over 65% for the full year (measured in NZ$). Our updated guidance on the full year result is for revenue of $175 million and EBITDA of $23 million – $24 million, exclusive of the one off gain from the Indian JV transaction. This assumes the NZ$/US$ will remain at its current elevated levels of just under 80c for the remainder of the financial year.”

“On the back of the sales growth we have been experiencing we believe we should, and can, achieve better than this. EBITDA of $23 to $24 million represents only a 13% EBITDA to sales ratio, and with sales having risen over 65% this year we feel we are not yet extracting sufficient profit from that growth,” said Mr. Robinson. “With the initiatives we have underway we would expect to be able to return to last year’s level of at least 18% EBITDA to sales ratio within the next 24 months.”

“The major differences between this forecast and the one given at the Annual Meeting of $27 to $32 million can be largely put down to the continued strength of the NZ dollar, higher than warranted expenses from our European operations and extra expenditure on our global marketing and sales capability to capitalise on last years FCP acquisition. There were also a small number of sales that we forecast to occur in the early part of this calendar year that we now believe won’t occur until later in the year. These are largely in the mobile phone and telecommunications infrastructure markets.”

“The European expenses are now under control and the creation of this JV in India will have major impact upon improving profitability from the European design source.”

“For our NZ based GPS business our year on year growth has again been significant. As I have said, we expect full year sales volume to be about 50% higher than the previous year and we continue to maintain our market share in the still rapidly growing personal navigation device market.”

Mr. Robinson said that Rakon’s customers continued to forecast strong growth for the coming calendar year despite the impact of financial market turmoil and its expected impact on consumer demand.

“Whilst we are cautious on the impact of the credit situation on our business, our customers that are exposed to consumer demand are affirming strong forecasts for the next 12 months. We also have a number of infrastructure related opportunities which we expect to generate income over the coming 12 months; these have come about as a result of the FCP acquisition last year, and as a result of this we have increased the proportion of our business that is not directly exposed to consumer demand.”

“With this Indian JV plus other plans that we have for the medium term, and even with the NZ dollar remaining within its current range, we are confident that Fiscal 2009 should produce a result appreciably better than we expect for Fiscal 2008.”

About Centum

Centum is a leading design and manufacturing company producing hi-tech electronic modules, subsystems and frequency control products. Centum employs 350 staff and was recently recognized as one of the 500 most valuable companies in India Centum is the industry leader in India, selling its products into domestic and global space, defense, telecom, industrial and automotive markets. Founded in 1993, Centum is listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

About Rakon

Rakon is a world leader in the development of frequency control solutions for a wide range of applications. Rakon has leading market positions in the supply of crystal oscillators to the GPS, telecommunications network timing/synchronization and aerospace markets.

Founded in 1967 by Warren Robinson, in the 1990’s Rakon became, and remains, the leading supplier of GPS TCXOs to the world market.

Rakon has a diverse frequency control product portfolio, ranging from low stability XO and crystal products through to rubidium equivalent frequency standards. In particular Rakon has excelled at taking niche, precision technology and creating commercially viable solutions for high volume markets.

Rakon is based in Auckland, New Zealand with principle manufacturing operations in New Zealand, the United Kingdom and France. Rakon also has sales offices throughout the world. For more information visit its web site at www.rakon.com.

[mondograss]

Well, folks wanted some announcements. Looks to me like they're continuing the good work, growing the business. And at the same time acknowledging that they're going to have to live with the high dollar and try to maximise the EBITDA better. So they seem realistic and would appear to be still a fundamentally sound company.

[JMKC]

Haha hilarious Mono. This earnings downgrade will see the stock at $2.50 today.

[dsurf]

A margin fall of EBITDA / Sales of 5% to 13 from 18 & profit down grade since AGM from middle of range 29.5m to 23.5m or 20% is hardly good news.

"Growing the business" sounds good but not if competitors are doing the same thing & all margins are compressing.

do not like the way FX is called the problem - It is thier hedging that is the problem & not the high NZ$

See many parallels with FPA - high tech, growing market share, margins falling, insufficient hedging, manufacturing moving offshore to contain costs as industry margins compress

[Malj]

do not like the way FX is called the problem - It is thier hedging that is the problem & not the high NZ$


I think that's a bit unfair. You can only hedge so far and other companies (like FPH) who hedged too far ahead then suffer a huge hit when they have to return to reality. I like a company that doesnt take too much cover and works to adjust their operations to compensate for it. I like the fact they seem to be accepting they will have to live with the NZD where it is.

In their last annual report they said they expected the average FX rate to be 0.70c and I have an analysts report that at the time said a 1c movement would have an approximate $1.5m effect on EBITDA. The average rate has been about 0.77c or so which is tough for any exporter.

[trackers]

Well she certainly has taken a pasting today. Not surprised with the result, don't altogether feel its that bad - given the horrible FX rates I could've coped with a bit worse. To see this company shed half its value in a mere few months is quite shocking.....

[dsurf]

I think that's a bit unfair. You can only hedge so far and other companies (like FPH) who hedged too far ahead then suffer a huge hit when they have to return to reality. I like a company that doesnt take too much cover and works to adjust their operations to compensate for it. I like the fact they seem to be accepting they will have to live with the NZD where it is.

In their last annual report they said they expected the average FX rate to be 0.70c and I have an analysts report that at the time said a 1c movement would have an approximate $1.5m effect on EBITDA. The average rate has been about 0.77c or so which is tough for any exporter.

I don't like a company that adjusts operations to compensate for foreign curreny. Why didn't they hedge their anticipated revenue 100% at 70c? Shareholders would have an extra 7c times 1.5 = $10.5 million ebitda and a share price that didn't fall when the announcement came. It's a shame really because I do like the company & product etc.

[mondograss]

Well hedges only last so long, if you'll recall they did hedge at 70c for quite sometime. I don't think anyone expected the kiwi to stay this high for this long.

So a company shouldn't adjust its operations to compensate? If tight (read "abhorrent") market conditions force a company to be more efficient in its approach, then what happens to that company once it's weathered the storm? And compare that to a company that just hangs on for grim death, saying she'll be right, this can't go on much longer... At least they're being responsive to the conditions and keeping the market aprised, more than can be said for some.

[trackers]

Well hedges only last so long, if you'll recall they did hedge at 70c for quite sometime. I don't think anyone expected the kiwi to stay this high for this long.

So a company shouldn't adjust its operations to compensate? If tight (read "abhorrent") market conditions force a company to be more efficient in its approach, then what happens to that company once it's weathered the storm? And compare that to a company that just hangs on for grim death, saying she'll be right, this can't go on much longer... At least they're being responsive to the conditions and keeping the market aprised, more than can be said for some.

Arguing about hedging around here is always a futile exercise, just go have a look at any gold/oil/fx exposed company. One minute they should definitely hedge (hindsight of course), the next minute people round here just caaan't understand why a company would give away its profits when the going's become good again.... Its a lose/lose.

[Te Whetu]

Hey,

As long as the company discloses their hedging position then their shouldn't be a problem among shareholders... say they didn't hedge but let you know; if you were so certain the USD was going to weaken against the NZD then you do the hedging yourself, buy some NZD with USD's.

As long as they disclose then you can hedge / reverse the hedge as you see fit.

Cheers,
Shaun

[Malj]

Well hedges only last so long, if you'll recall they did hedge at 70c for quite sometime. I don't think anyone expected the kiwi to stay this high for this long.

So a company shouldn't adjust its operations to compensate? If tight (read "abhorrent") market conditions force a company to be more efficient in its approach, then what happens to that company once it's weathered the storm? And compare that to a company that just hangs on for grim death, saying she'll be right, this can't go on much longer... At least they're being responsive to the conditions and keeping the market aprised, more than can be said for some.

Well said mondograss.

Hedging is a gamble, sometimes you win, sometimes you lose. Only reason to hedge is to give yourself some certainty in the short term, going too long is just a gamble.

I just listened to the conference call. Didn't say a hell of a lot more. There was a presentation that I think you can download from their website: http://www.rakon.co.nz/investor/presentation/ was the link I used.

[winner69]

Even with the shareprice down nearly 50% over the last year still trading at pretty high multiples. At 290 still has a PE of about 30

OK currency stuffed result up --- they say 30% higher the result will be ---- even allowing for that PE would still be about 20

Agree with the comments made by others in that if you need to adjust the way business is done if you want to remain competitive. Some are saying that the NZD could go to US$0.90 -- now that would hurt RAK. I wouldn't count on a $ decline saving the shareprice

With high valuations and the possibility of further disappointments relative to the high expectations already built into the RAK shareprice I stay away in the current environment.

[trackers]

Even with the shareprice down nearly 50% over the last year still trading at pretty high multiples. At 290 still has a PE of about 30

OK currency stuffed result up --- they say 30% higher the result will be ---- even allowing for that PE would still be about 20

Agree with the comments made by others in that if you need to adjust the way business is done if you want to remain competitive. Some are saying that the NZD could go to US$0.90 -- now that would hurt RAK. I wouldn't count on a $ decline saving the shareprice

With high valuations and the possibility of further disappointments relative to the high expectations already built into the RAK shareprice I stay away in the current environment.

Yup fair call definitely, hadn't thought too much about p/e. A quick look on ASB research shows:

Earnings and Dividends (http://javascript%3Cb%3E%3C/b%3E:glossaryId%28%27101%27%29)Forecast (cents per share)
Curr 2008 2009
EPS 9.7 11.2 20.0
PE(x)29.9 25.9 14.5
DPS 0.0 0.0 0.0

P/E updated yesteday = 26.3

[Malj]

Citi released a note last night.

They had P/E as follows:
2009E 25.8
2010E 17.2

Most hitech stocks overseas would be trading on 09 or 10 PE ratios (i.e., trading on projected future value, not current value like you would a yielding stock). This isn't something we're so used to here in NZ, but with something like the NASDAQ its common.

All that said Rakon's PE is still pretty high and you make a really good point, can't argue with the facts.

[winner69]

Most hitech stocks overseas would be trading on 09 or 10 PE ratios (i.e., trading on projected future value, not current value like you would a yielding stock). This isn't something we're so used to here in NZ, but with something like the NASDAQ its common.



Would have thought that all stocks (hitech or what) trade on projected value. Its just that projected value for hi tech companies is higher ...... but the problem is that 09 and 10 earnings in most cases do not eventuate .... with the subsequent consequences

The big question with RAK is what is realistic projections ..... and maybe they will just morph into a component manufacturer after all and should be treated as such

[Malj]

The big question with RAK is what is realistic projections ..... and maybe they will just morph into a component manufacturer after all and should be treated as such

Good point. For me, if they can stay as a market share leader in GPS there is a lot more potential than a 'me too' component manufacturer. I'm picking they'll do well in GPS in the medium term, longer term I guess I need to understand a bit more about the business. But thats just my take on things, other people may think differently and to be fair its all a bit of guesswork at the moment :)

[redzone]

thats the problem..guess work...if the ceo doesnt know then how the hell is the shareholder suppose to know....its all guess work as you say...my guess is that the SP is still way to high ....its like the percentage you get with finance companies...you need a premium on investment for the risk...at this stage the SP is not in favour of the investor RE RISK

[Footsie]

dont go anywhere near this stock until the uptrend resumes

profit warnings are a bad bad sign.....

my guess - in 1 yrs time you will be able to buy it at $1.00 something.

In fact you should not be buying any NZ stock full stop.
We are in a confirmed bear market.... and this could take months or years to clear out.

REmember "cash is a holding"

[beacon]

Hear, hear

[AMR]

Anyone know why RAK is up 25% in the last few days? Or is it simply a dead cat bounce?

[Footsie]

bear bounce

[a bowden]

What are peoples ideas about RAK at this point, with the market now asking $3.25, has the share price jumped to quick and will we see a point of opportunity to enter for those that missed the boat this time. I sure did, didnt expect it to keep going up like this. The reserve bank forcasting a drop of up to 10c in the NZD which would favour RAK. Should we be jumping in or should we be waiting for confirmation of a new uptrend. Seems to have clearly broken the NOV - MARCH Downtrend

[mondograss]

Todays huge jump seems to be on the back of rather light turnover, as have some of the previous increases. I still think they're a good stock, but I'd suggest that the rollercoaster is by no means over. The current rise seems a bit fishy to me and I wonder if there's something else going on that the market is not aware of. I think if NZX were doing their jobs they'd have asked for a please explain by now.

[lotzstuff]

Rakon has just made announcement.......

RAK
01/04/2008
ADDRESS

REL: 1222 HRS Rakon Limited

ADDRESS: RAK: Presentation to UBS Growth Conference, Auckland

Rakon presented at the UBS Growth conference in Auckland on 31 March 2008. A
copy of the presentation given is available on Rakon's website
(www.rakon.co.nz) under the Investor Relations section.

[Phaedrus]

Seems to have clearly broken the NOV - MARCH Downtrend

Sure has. The trendline was broken a week ago on 25/3/08 - that was the time to buy, not today. Only time will tell, but in my opinion, buying today would be risky. After such a rapid run-up, a retracement is likely.

Mondograss raises a very important point - todays rise has (so far) been on miniscule volume, just 28,000 shares. On top of that, this entire uptrend has been on falling volume (marked by light blue trendline) and the most likely thing would be for RAK to retrace from this peak before rising again.

This rapid rise is presumably linked to the UBS presentation Rakon made today (which I haven't yet found). Isn't it interesting that the breakout occurred a week before this!

http://h1.ripway.com/Phaedrus/RAK41.gif

[a bowden]

The UBS presentation was nothing in my beleif that would afffect the share price, it was just showing what RAK manufactures and their products role in electronic devices. I think the rise might be on the back of the forcast made that the NZD will decline around 10c in the near future, this was made a few days back.

[living2]

im gonna have to say windowdressing up to the 31st. todays rise is some TA guy who thinks its broken the trendline.
OR FISHERS !!!!

[scamper]

There have been 38-ish trades, so possibly several guys who think the trend has broken...
and, only ~$320K spent in batches under or around 10k volumes...
as usual, Mr P's "risky" buying comment well worth noting. Cheers all.

[winner69]

OR FISHERS !!!!

My guess as well ..... seeing she saud she was back in the market and could (needed to) buy more RAK and PPL and keep their %age of the company down to reasonable levels now the Super Fund shares have been transferred

If so this baby could go all the way to 500 again .... I'm having a little play for a bit of fun so see how high it will go .... one Fishers are on a roll there's no stopping them .... and it'll hekp the KFL shareprice as well

[redzone]

Sure has. The trendline was broken a week ago on 25/3/08 - that was the time to buy, not today. Only time will tell, but in my opinion, buying today would be risky. After such a rapid run-up, a retracement is likely.

Mondograss raises a very important point - todays rise has (so far) been on miniscule volume, just 28,000 shares. On top of that, this entire uptrend has been on falling volume (marked by light blue trendline) and the most likely thing would be for RAK to retrace from this peak before rising again.

This rapid rise is presumably linked to the UBS presentation Rakon made today (which I haven't yet found). Isn't it interesting that the breakout occurred a week before this!

http://h1.ripway.com/Phaedrus/RAK41.gif

thre was a presentation done in Auckland on or about the 25th......

[winner69]

If so this baby could go all the way to 500 again .... I'm having a little play for a bit of fun so see how high it will go .... one Fishers are on a roll there's no stopping them .... and it'll hekp the KFL shareprice as well

Come on carmel .... keep buying ... you doing well at the moment

[trackers]

Wow, amazing recovery -I took my losses at 2.80 odd as i thought the market had really given up on rak, to be honest...bugger

[craic]

I have been riding 15,000 of these all the way down and now all the way up - I hope - its nice to see some of portfolio going the right way.

[Entrep]

These are bargain $5+ shares

[mondograss]

Flat yesterday and down 6c today after a strong run at the start. Looks like the revival has run out of puff. Probably the recent rally is getting overwhelmed by people who got toasted in the big fall trying to bail out on the bounce. This is going to be pretty volatile for a while yet.

[Entrep]

Flat yesterday and down 6c today after a strong run at the start. Looks like the revival has run out of puff. Probably the recent rally is getting overwhelmed by people who got toasted in the big fall trying to bail out on the bounce. This is going to be pretty volatile for a while yet.

Sure, if they need the cash then bail, otherwise I don't see why

[tobo]

Expecting the recent rally to have been a bit rash, I'd put a tight stop on this as it climbed for past few days - got stopped out today because I reset it higher after the morning runup.
Happy to have some cash. Still think we are in Bear market for 6 months or so. I find it hard to resist 'bargains' but am learning the hard way.

[Entrep]

This is surging again. Watch tomorrow morning

[Steve]

This is surging again. Watch tomorrow morning

Entrep...junior ramper?! :rolleyes:

[trackers]

This is surging again. Watch tomorrow morning

No offence, but you've had 4 posts and they've all been utter rubbish.

Edit: Lol beaten!

[mondograss]

The volume of this recent rally has been almost absurdly light. Most of the upwards movement has involved only a few thousand shares changing hands, probably from the left hand to the right hand of one solitary trader. As much as I like this company, I'm under no illusions that this share will stay depressed as long as the US$ does.

[craic]

Disc - I have 14,000 of these shares. The company announced yesterday that its annual report would be released in May. There is a common pattern of insider trading around most companies wherein shares are either dropped or picked up according to the expectation of a bad or a good report. Clearly there are many who know the result long before the public announcement. The nod and the wink in this case seems to be saying that things are going well.

[scamper]

Hello Mondo, Craic and all
I too have noted the very light volume of the recent little uptrend, and am puzzled why the OBV took a positive turn?
On the good side, the price is ahead of the exponential and weighted moving averages.
I do hope it's all due to a realistic nudge and wink scenario... cheers.

[Phaedrus]

The OBV is just doing what it should oughta do, Scamper. Rising on up days and falling on down days. Confirming or presaging changes in the shareprice trend.

On Balance Volume is simply a running total of volume - so it goes up every time there is an Up day. There were 9 consecutive updays recently and even though volumes were only average, cumulatively they had an obvious and inevitable effect on the OBV.

http://h1.ripway.com/Phaedrus/RAK49.gif

[Bob Marley]

Hey mon, I see RAK has attracted a bit of interest prior to next week's FY08 result mon. I recall the last couple of result announcements attracted similar attention mon. The result has already been flagged by the company (EBITDA of about $23-$24m, which equates to about $11.3m, excl the $1m gain on the Indian venture).

I assume the drop in the NZD/USD is having a big influence mon plus people may be expecting some news about their proposed Chinese manufacturing plans mon; maybe some new guidance mon for FY09; or maybe some update on the Indian venture mon.

$11.3m NPAT equates to a historical PE of 38x, in a fairly ordinary year where they had some teething problems with their new acquisition.

I believe they should be able to achieve NPAT of close to $20m in FY09 (EBITDA of around $36m) assuming a NZD/USD x-rate of $0.76; a forward PE of nearly 22x - not too unreasonable if you're a believer in their growth prospects and a believer that the NZD will drop further over the next 1-2 years.

Disc: Hold RAK

[mondograss]

Thanks for the analysis dude, it remains to be seen if the result will meet expectations in a fairly cagey and suspicious market. If not I can see RAK taking another caning.

What I'd really like to hear is how they're going with that micro GPS receiver of theirs. If they've finally got someone taking that up then it could be good. Anyone heard if the iPhone v2 is going to have GPS? :-)

[Malj]

Anyone heard if the iPhone v2 is going to have GPS? :-)

I heard iPhone v2 will be 3G (HDSPA) and GPS enabled. Rumours were of an early June launch but I don't think Apple are confirming anything yet. Also read Nokia are planning to sell 35m GPS phones in 2008.

[Steve]

Only 1 more week until the profit announcement - I wonder how much lower the NZD will be by then and what expectations they indicate on future profitability...

[Malj]

Copied from NZX. Doesnt sound that material to me... Anyone know if this is a big deal or not?

16 May 2008: Auckland, New Zealand:
Rakon has announced it plans to sell the assets of Rakon’s commodity business, based in Crewkerne UK to IQD Frequency Products Limited. This business is largely involved in the sourcing and supply of mass market components, not manufactured by Rakon, to the European market.
Rakon Managing Director, Brent Robinson, said this was a logical step in Rakon’s growth plans, and the business was quite different to Rakon’s design and manufacturing operations.
“The Crewkerne business was included as part of our acquisition of the frequency control products division of C-Mac MicroTechnology in March 2007. Following this acquisition, we undertook a strategic review to determine what value the commodity trading business could add to the Rakon group.”
“We determined that Rakon was better to focus its full resources on the substantial opportunities ahead by growing our enlarged manufacturing business. Similarly we concluded that the commodity business would be better served by owners and management focussing specifically on the needs and opportunities of that business.”
The new IQD will maintain a very close working relationship with Rakon and both companies will continue to supply each other with components. Rakon’s other European operations in Lincoln, Harlow and Argenteuil are unaffected by the sale.
“Apart from some local customers seeing a name change we don’t expect there to be any impact on our existing customer base,” explained Mr. Robinson. “We will still offer the same broad product range to our strategic customers that we always have and IQD will continue to supply Rakon products to their customers.”
The new company will retain the existing management and staff of the current Crewkerne operation with the transfer expected to be concluded at the end of May 2008.
The proceeds from the sale will be equivalent to the value of the assets held. The business accounted for approximately 9% of Rakon’s revenue and 3% of earnings in the 2008 financial year.
Rakon will release its Full Year 2008 results on the 22nd of May, accompanied by an update on operations.
ENDS

[Footsie]

Phaedrus

Can you please post and updated chart

Thanks

[Phaedrus]

Here you are Footsie.

RAK remains in a downtrend with a confirmed trendline in place (red line). There was support at $3.00 (a nice round figure) but that was broken last month. Green arrows are Buy signals, red arrows Sell.

I have included the On Balance Volume plot, but really it provides no further insight, other than indicating that RAK is not being distributed (or accumulated).

The chart includes the latest price of $2.90, but of course the Close may be different.

http://h1.ripway.com/Phaedrus/RAK79.gif

[Footsie]

thanks phaedrus

[Footsie]

Apple launches its new iphone with GPS tonight

there is a slim chance the RAK might have won the contract or at least part of it
http://www.nzx.com/news/markets/4585825

either way its very good for the industry and it's likely that RAK will win other contracts once Motorola, Samsung etc put GPS in phones later this year. It's rumoured they have already signed up Blackberry and Nokia

FYI whoever wins the apple contract is worth hundreds of millions in revenue over the next few years.
$4 a GPS chip... 10 million iphone sales p.a. = 40m in revenue

with 50% of the Global GPS market we can safely assume that RAK will start winning some large contracts soon.
within 2 years GPS will probably be mainstream in most phones


I owned RAK from the IPO.... sold at 4.80-5.15.

Technically re-entry timing now might be poor.
But fundamentally i think its about right.
I used to think they were overvalued but after re-assesing the facts..... no debt.... and the massive industry growth ... combined with the IP... and falling NZD....
potentially i think RAK could do half a billion in revenue in 2 years if they get things right.

DYOR

[Footsie]

We will know in a few days or sooner if RAK are supplying GPS chips for the iphone

[a bowden]

Would be awsome if they were supplying Apple.

With the dollar being at a more resonable level RAK is becomming more and more tempting.

Footsie how will you be able to find out if RAK is supplying Apple?

[upside_umop]

im guessing iphone techno geeks will pull apart the phone and determine the components to see how much it costs to make phones, inside they might see 'RAK' stamped on the gps reciever :) ...analysts can then also determine the profit margin for apple etc.. well, thats what they did with the 1st generation.

[hesiod]

http://live.ifixit.com/Guide/First-Look/iPhone3G

No sooner said than done

[Robomo]

http://live.ifixit.com/Guide/First-Look/iPhone3G

No sooner said than done

There is no indication of the presence of a GPS chip, let alone who made it. Seems like it will be a bit more time until the techos analyse the chips more deeply.

[a bowden]

Rumors look to be swinging Broadcoms way.

http://blogs.moneycentral.msn.com/topstocks/archive/2008/05/30/iphone-a-huge-boost-for-broadcom.aspx

[Robomo]

Rumors look to be swinging Broadcoms way.

http://blogs.moneycentral.msn.com/topstocks/archive/2008/05/30/iphone-a-huge-boost-for-broadcom.aspx

Don't think so - this quote is from May 30. I note on Nasdaq that there is no unusual volume and the share price has remained flat for the past six weeks. I would have expected some positive price movement and increased volume if Broadcom was the supplier.

[Footsie]

Infineon

But as I said. It bodes well for RAK and the industry now that GPS are in phones

[fredsmith]

Just to clarify, Rakon don't make GPS IC's or Chips. They make the Frequency Control Devices like Oscillators etc that help generate and stabilse the correct frquencies needed by the GPS Chips.

[Footsie]

I see you are a new poster Fred

are you from Rakon?

please explain what you are saying further

[fredsmith]

Nope, not from Rakon. Just an interested bystander that has a hobby interest in GPS and electronics.

[Footsie]

somehow I doubt that :)

[a bowden]

Back to the point, Fredsmith you have some obvious knowledge about this area. Do you know if it will be possible or not for someone out their to identify a rakon frequency control device inside the gps chip or iphone, or will it be to small to tell.