The recent failure to renew the Telstra contract makes this one very very difficult stock to project forward the next 18 months. I can just as easily make a case for 24 cents as I can for 50 cents.
The basic dynamic as I see it is that we lose a lot of money from the Telstra contract, but we make that back from NBN contracts. The problem there however is timing. NBN is a political process as much as it is a real project. NBN has a history of stretching out for years what should take months.
The nightmare scenario for SSM would be that the Telstra revenue ends, the NBN revenue fails to show up timely, and we get a few really bad reports in the interim. That's our risk of 24 cents.
The 50 cent case would be the existing NBN revenue comes in 2013 as projected, and we start winning additional NBN business on top of that, giving us further upside.
Honestly, I feel that buying into SSM today is simply flipping a coin. There is no amount of analysis or research that can accurately forecast how this all times out. I really like the business and its opportunities, but I need to wait for a lower price here before I put capital at risk.
SSM Price at posting:
36.8¢ Sentiment: None Disclosure: Not Held
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