Telit Communications Plc (lon:tcm)
Telit Communications - Overreaction?


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Title: Telit Communications - Overreaction?
Company: TCM - Telit Communications Plc
Share Price Then: 114p
Author: Ian Smith
Date: Thu 24 Aug 2017
Comments: Telit are an AIM company with a current market cap of about £150m and specialise in wireless and mobile telecoms technology.

Their share price recently dropped by over 50% after revelations that the CEO has an old (1992), US indictment under a different name, despite the size of the drop the current value would be seen as high any time prior to the end of 2013.

I think that it is worth noting that the CEO has been at the company since 2000 and owns 12.6% of the shares, so apart from being embarrassing is this important when considering the company?

The company was founded in 1986 and has been acquiring companies and expertise since then and has sites in the USA, Germany, Italy, Israel, Korea and elsewhere. So it is not a new business with one product cooked up in a shed that might not really work.

It would be reasonable to have an initial reaction of worrying that there is something hidden in the books, but that doesn't mean that there actually is. The passage of time would suggest that there isn't, however I am aware that Parmalat which collapsed in 2003 is a good example of how problems can be hidden.

What may be more worrying is a placement of new shares of about 10% of the existing volume for £40m, especially as the interim results posted in August again reported a loss meaning that since 2005 only 3 dividends have been paid.

Prior to this news trading volumes were very low but currently this is still fairly high volume which has to be speculators.
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