lt cap,

I had read the 'bare' story that MKM was cutting PT from $15 to $13 with a 'neutral', and thought it ironic that it was MKM's faith in making INFN it's 'best pick' IIRC that propelled it to ~$24. I was skeptical, and at $11.80 or so thought that this is what I'd been waiting for: Buying it at about where Welch and Fallon made a substantial open-market buy. But the detail in the story you provided - well, given the numbers he's dug into, the coherence of his argument, and the fact that yes, INFN's last CC was a mess of non-visibility, it gives me pause. I'm going to ponder it today, as part of me still says this is a good price, and perhaps the stock is over-reacting. As well as looking into covered calls. Thanks for posting - without reading that, I would've already made a buy today. In addition, one could say we're still searching for a short-term bottom, as it was above $13 a little bit ago and the decline has been pretty steady over the last couple weeks or so.

And, BTW, the analyst is portraying Transmode as a drag and facing stiff competition. Fallon has had nothing to say but that acquisition was a perfect fit, and saw no such problems. Ditto for the InPhi software solution - I recall he specifically said it would have 'zero' impact on INFN's business in that sector.

MKM's Genovese was indeed one of the bulls and an early one at that, he was right then.  So I believe his argument may have some validity and given market reaction, his opinion carries weight.  That said, this is after a 50% hair cut from highs.  

Given that the CEO's open market purchase was substantial, it begs the following question: could he be wrong or is it because he can afford to wait?  Right this moment, I tend to think the latter is the likely answer.

All that said, I think waiting for the CC is the safer course

lt cap,

As you cite in a later post, INFN has always been an unpredictable loon of a stock, sometimes moving very substantially for no apparent reason.

This time, however, you've delineated the reasons. starting with Genovese's detailed trashing of the stock. (His detail and reasoning is compelling, if one buys his basic premises. Part of the 'problem' for INFN with his analysis is that he seems to know a lot more about their business than mgmt. does, even if that's somewhat of an illusion.)

In G's analysis, and others, it seems that everything that was a positive, is now a negative: INFN was on course to continue to grow substantially, esp. given that it still has the best hardware/software solutions in their main market, and the old question of 'will they be around in 10 years' is moot. Transmode, which Fallon rather pounded the table on, and which I think (IIRC) he said would be accretive to income pretty fast, is now seen as a drag - a difficult competitive environment for its niche. 

I could cite more 'flip side' issues, but you and others already know the whole story.

I agree with you that the substantial market price buys of stock by Fallon and Welch were likely bought with a shorter time frame than years for those buys to bear fruit.

I think it comes down to this, altho perhaps over-simplified: Who knows their business better, mgmt. or Genovese and other negative/skeptical analysts. One would think it must be the former - if CEO, CFO, CTO don't, then who does? And that's the rub, kind of..........Genovese seems to be providing all the detailed 'color' that was missing from INFN's last CC. Is is possible that mgmt. is in some kind of denial/delusional state? Or was their fumbling lack of adequate answers to questions about projections going forward because Genovese is right, but they didn't want to come out straight and deal with their plan to make the future brighter?

I tend to think mgmt. knows its business better than others, even though Genovese's analysis is detailed and appears definitive. Fallon has been a straight shooter. So I think one should tend to believe his nothing-but-bullish statements on the Transmode acquisition and its impact on revs. (Of course, the obverse of this would be 'to believe his nothing but bulls*it statements', lol.)  I tend to believe Fallon is still a straight shooter - but one thing he needs to do is polish his CC management skills when times get rather rough.

In disclosure, I may tend to believe Fallon because I have a semi-boatload of this stock, to the point where the weight of it may sink the ship :-) And as you point out, it seem terrifically over-sold. But that kept being true on this horriic slide down, and might be true now. If one writes covered calls on July 22 stk $11, you're covered down to about $10.85 (working from memory here.) That would be pre-CC, so it's a bit safer than going out longer to encompss the likely CC date. But it feels abit too risky - if anyone had called for an $11 price when it was riding high, it would have seemed more than ludicrous. $9 seems similar but.....possible. So the premium on calls is a fairly small fig leaf.

If I were Jester, I might hedge this, saddle spread that, and do the calculus to put the odds in my favor on a buy. But I'm not him, so I'll probably continue to watch is, half-tempted to buy on over-sold theory, half spooked that it might/can go lower. The price action, at least, looks like a train wreck so far. I will likely sit with the shares I've got, and figure it's another patience-of-Job stock position.

I just realized that INFN broke below its 52 wk. low of $1150. Not good.

Good post, well thought out. I tend to agree with you.  I think management knows the company and more importantly the segment they operate in better than analysts.  I seriously doubt Fallon would have spent over one million of his own money in the company unless he had a good idea that the problems were only a bump i the road. Now, that is not to say that the very short term could be like Genovese describes, but I doubt he has visibility all the way to the end of 2017 while INFN's management is clueless or in denial.

I personally think the softness is a few quarters long, not 18 months long.  IRRC, Genovese in his research note mentioned that the customer that halted purchases of the Transmode would come back late in the year, so if most everything is going well, and the lack of visibility is for Transmode, then I frankly doubt the sales remain flat for that long.

From a contrarian point of view and given the better than 50% hair cut from 52 week high, I like the fact that analysts are downgrading the stock, it can't be far from a bottom.