I've done some work in this business (embedded networks) and I just don't know how INT could have ever believed it's previous business model was going to work - they were thinking years ahead of reality. INT's competitors are small private co's with low overhead and also (probably loss making) subsidiaries of large multi-nationals and even at least one that is a government entity. IMO those businesses are appropriate for what is still a very small but fast growing market. I've heard INT's new CEO speak and he does seem far more practical - he appears to understand they need far lower management overheads and to partner with reliable product companies to ensure they keep a happy customer base and avoid additional support overhead. INT is going to be a better company moving forward I just don't know if it will be enough..
The questions in my mind are: Can INT cut enough overhead to meet current market reality? How much further pain could investors face in the short term even if large improvements are made? Is the overall embedded market going to expand fast enough? How much further pain could investors face due to cashflow pressure during revenue expansion if it does come? How tarnished is the Intermoco brand? How many more competitors will open as the market grows? Will one or few companies end up dominating the market? If one or few companies dominate, whats the chance that either INT will be among them or they will see enough value in INT to buy it out?
Who knows - definitely a gamble.
AHL Price at posting:
0.1¢ Sentiment: None Disclosure: Not Held
