Thursday, September 22, 2005

Katrina the great sandbox of excuse for companies?

COMS reported solid quarter with nice ramp in the new 5500 switch and VoIP where as the acquired security business was inline with expectations. I commented on COMS acquisition of TPTI (for $430M in cash) and it seems like buying growth has not worked so far. During the quarter Americas grew nice 8% sequentially, gross margins improved also, and guidance was slightly ahead of expectations. I expect other enterprise networking companies to see similar trends, especially FDRY and CSCO.

What was surprising to hear on the call was that management called Katrina "the great sandbox of excuse for companies"? Did I hear that correctly? Tell that to AA or X, or various other companies that are seeing higher cost of goods due to Katrina. Katrina might not have affected COMS during the past quarter because of timing of Katrina was at the end of COMS fiscal quarter. But surely there will be companies that are negatively impacted by Katrina and now Rita, just as there are companies like SGR that benefit from these events. It will be upto investors to see behind the veil of Katrina or Rita and make sure managements are not hiding the real issues.


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