Openwave Systems, Inc. (OPWV)

Earnings Estimates Revised Downward

This pick based on browsing through Hottest 30 days performers on Caps, and cherry picking the best of the best performers. It's worked in the past and I hope it works today

PULLBACK SHORT TERM BUT COMING BACK IN FAVOR

Negative:

1. They have a starbucks inside their corporate headquarters, which employees get in the morning for free... I can understand this perk if you were profitable... maybe. Poor culture.

2. Have you looked at their business model?? They have no moat. Wireless companies build their own browsers. Verizon could do that too, which would destroy openwave.

3. I'm sure that more scandals are yet to come. With the stock option backdating, senior management turnover, etc there are still skeletons in the closet.

Positive:

1. A serious reorganization is needed. At least they have already fallen a long way... the last bit should not be as hard.

Shot in the dark

Most investors have given up on Openwave Systems and thats precisely why I'm recommending the stock now. OPWV is now trading at 10 times future earnings and those earnings estimates have been rising the past six months, something we havent seen from Openwave in over two years. OPWV has ample cash on hand with 55M dollars more cash than outstanding debt and they are trading at just 1.2 times book, a near historic low for them. We are also beginning to see the upgrades based on valuation stream in with Bean Murray upgrading OPWV this morning. I'm going to back the dark horse here and bet on a double in 16-18 months.

Nero

Sagetrade

VALUE LINES - WORST PERFORMING STOCKS 13 WEEKS

As of close of business on 12/04/2007, this was a 5-star Morningstar stock that was trading below half of it's Morningstar fair value.

looking for a upswing

This was the dumbest call I've made....only because it was the most uneducated.....went off a "tip" on thestreet.com. It wasn't Cramer but one of his minions. He loved it...my bad.

I'll take my medicine and ride this out a bit. Down 20% as of this post.

CaptFoolDawg

As many have mentioned, this stock has bottomed-out and is now looking at a significant upside and/or buy-out...You had your chance!

Near bottom, possible buy out, market reacted negative to rejection of tender offer. Should rebound

Down size saves money equals more profit!

Openwave’s performance continues its reducing trend in the third quarter fiscal 2007. For the nine months ended 31 March 2007, revenues observed a decline of 23% to $246.4 million. The fall can be attributed primarily to reduction in License revenue, while lower maintenance & support and sale of Systems segment further contributed to the decline. Net Income tally was also hampered by the drop in the top-line, as Net loss totaled to $72.8 million, compared to a profit of $10.3 million a year ago. The drop in margins was the key reason for the loss, while existence of stock option review and related cost further added fuel to the fire.

The company in the current quarter completed acquisition of WiderWeb, a leading developer of mobile web access solutions for $5 million in cash. The acquisition adds an open internet browsing solution that re-formats web content for mobile phones, to Openwave’s already growing product portfolio, though this acquisition is not likely to have an impact on the revenue tally of Openwave in fiscal 2007.

Openwave recently announced that it has hired Merrill Lynch to consider strategic alternatives, including the possible sale of the company. Given the turmoil in the company related to resignation of the CEO and stock option review this can be cited as a move by the board to generate a healthy return for the investors. However when the uncertain product outlook, falling margins and massive reducing in 2007 and 2008 guidance is considered, it will be highly unlikely that Openwave will generate a huge premium on its sale, and it might be better to part ways with the company.

This stock has hit bottom. Yes, it has its problems. Merrill Lynch will find a buyer and OPWV will get purchased by someone who hopefully knows what they are doing, unlike the Ex-CEO.

Merrill Lynch has a mandate to sell the company. This is a major player in Locaion based Services software, which is the fastest growing technology domain for the next 5 years. If well managed Openwave could be a 5 Billion company. So, a Private Equity will surelly buy it in a few weeks or months. Nokia may also bid for it.

Deteriorating Fundamentals

Openwave has had steady sales growth over the last 3 years, and finally started earning a profit. They got hit pretty hard the last couple months for 2 reasons... 1. a couple of analysts downgraded OPWV. And 2. OPWV received a de-listing warning for failing to file financials on-time. The reasons stated for downgrade was due to OPWV not being able to meet expected sales revenue. Openwaves revenue for the last quarter was off predictions by less than 1/2 % but yet still outperformed the previous quarter (are you kidding me?). As for the delisting letter... they have petitioned and there is stay at the moment. It could potentially be bad if Nasdaq rules against them & this has investors a little freaked out, but typically when this happens, Nasdaq has ruled against companies primarily in only cases of gross neglegence.

Too much technology not to succeed