There were some cheers on the board because Ambarella beat estimates. I’d like to ask the following:
Who cares if they beat estimates if their adjusted earnings were 34 cents, DOWN more than 50% from 71 cents last year. And if these terrible earnings were arrived at by taking no taxes at all the way I read it, and taking a tax credit instead. Fully taxed earnings would probably have been under 20 cents, down from 71 cents.
And their GAAP earnings were 5 cents, down more than 90% from 56 cents last year. And that was also achieved by not taking any taxes and taking a tax benefit.
Whoopdeedoo! They “beat estimates.”
Sorry to rain on the parade.
Saul
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Saul,
I know you mentioned that tax credit after last quarters results and I exited my position because of the concerns you raised. How are they able to apply it again? How many quarters can you keep doing that?
So glad you brought that to our attention.
Justin
I know you mentioned that tax credit after last quarters results and I exited my position because of the concerns you raised. How are they able to apply it again? How many quarters can you keep doing that? So glad you brought that to our attention. Justin
Hi Justin, Glad to have been of help. Remember that this doesn’t mean that they won’t pull out of this and do great in the future. Just that presently they are doing terribly and fudging it.
And note that AMBA established a stock repurchase plan.
Repurchases under the program may be made from time-to-time through open market purchases or through privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors.
I may be a suspicious old coot, but that sounds to me as if this plan was set up to allow AMBA insiders to sell shares back to the company at “privately negotiated” prices, without depressing the stock prices with their large sales.
Saul
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I may be a suspicious old coot, but that sounds to me as if this plan was set up to allow AMBA insiders to sell shares back to the company at “privately negotiated” prices, without depressing the stock prices with their large sales.
I never realized how some buy backs worked. Always thought the buyback stocks were bought on the open market. One hears of Buffett get certain deals on stock prices, and stockholders getting letters offering to buy shares, but never realized how some buybacks can circumvent the market for the benefit of management.
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