arasor dip defies outlook

from australian IT section today:

Mahesh Sharma | November 06, 2007

ASX-LISTED optical chip manufacturer Arasor has run into heavy weather, with its share price more than halving in the past three months.

Arasor makes chips for laser televisions and broadband networks.

A cash-flow statement lodged with the ASX says it is on track for its 2007 calendar year forecast of a $19.4 million net loss and revenues of $122 million.

Australia and New Zealand vice-president Scott Wilkie has had difficulty explaining why the stock hasn't performed well in recent months.

"Our directors have run and established three Nasdaq-listed companies previously, and our business strategy, the management team and the market opportunities are all the same," he said.

"Therefore the stock price running up and now running down must be external to the company and it's not something we can directly control. The bottom line is if the company executes its business plan we'll be in a very interesting position this time next year."

Arasor was on track to be operationally cashflow-positive in 2008 and "feels the share price is severely undervalued and has no plans to conduct any equity based capital raising".

Mr Wilkie said a stigma lingering over tech stocks since the 2001 dotcom bust had scared off some potential investors.

"That definitely makes it tougher on us. There's obviously a very extended education process, as local investors are far more prepared to invest in an iron-ore project than a tech company.

"From our perspective I think we knew what we were getting into in Australia and we're very aware that the market here won't reward the potential of what we do, so we'll have to actually deliver before we are rewarded locally."