My last take on UBNT was that it is a train wreck waiting to happen. Much as I was intrigued with the new products/markets, I could not shake off the string of the counterfeit, the misguided new prodect and the bank fraud. I was concerned that they were entering a totally different distribution system in pursuing the retail customer overseas. I was imagining another quarterly performance by Pera in which he would say how the marketing (or whatever) guys had screwed it up and he was taking over and fixing that function.
I will again make the claim that I was the one who brought Ubiquiti to MF. While doing DD on Ruckus Wireless, I stumbled upon UBNT. Reading their discription of the business and notng the word “disruptive” about a gazillion times, and believing they did have a unique business model, I posted about UBNT on some board or another.
And, as I have previously posted, I was a fairly early user of Ubiquiti equipment. I still have a (now bare) 80 foot tower which graces the field on the other side of my front yard fence. The Ubiquiti equipment (first generation) is in a box somewhere. (Disclosure: I don’t know my access point from my base station so don’t beat me up too much). The accumulation of unreliabilities of DSL service to (?) access point, modem, cables, Ubiquiti transmitter/receiver, cables, and router kept me in far too frequent contact with an equally unreliable (and costly) tech guy. Therefore, I am communicating this via a pocket wi-fi, Ubiquiti itself having been disrupted by the expanded reach of a 4G service (albeit oversubscribed and soon to be near usless when school day is out thousands of third-world school kids take out their 2009 i-phones and play whatever-it-is).
The Ubiquity community exists. It exists (or did exist) mostly for guys like my techie, who was basically a wireless security camera installer. He is the one who knew about Ubiquiti. He could talk the talk and these guys helped each other. And sometimes argued, and sometimes bitched about the glitches and suggested fixes…. So, I asked questions and the community reached out to help me. It was not successful because this first gen stuff was not consumer grade and and I am not tech grade. But a fraud? Nonsense (previous word censored). IMO, the Ubiquiti community is real. Whether it is sustainable or beneficial to some new products is another issue.
Despite my investing and using experiences in UBNT/Ubiquiti and resulting doubts, I recently made a small investment. And, I added on the Citron drop. All this said, my take on the Citron piece is that it is 90% garbage. The accounting is a fraud? Who is being frauded? If I own a company and I am not leveraging debt and not paying dividends, …. what is my motive to cook the books? What do I gain, except an ego trip on how successful my company its? O.k., I need to buy out my Grizzlies partners. For that purpose I set up this disruptive business model 10 years ago? Farsighted business man that. O.k., go into this consumer level product so I can stuff the distribution channels, create all these fake sales and dump a couple of percent of my shares on the unsuspecting? I mean, c’mon, do you buy back shares of a company, the shares of which you have inflated by accounting fraud? Help me out here, guys ’n’ gals. I’m just typing out that which streams through my head.
Beneish M-score. I just say this. One ought not give weight to it unless familiar with its basis and the assumptions or conditions which are used , and whether those are valid with respect to the company being analyzed. Nice to have a -2.22 cutoff score that defines manipulation. And UBNT did have a -4 score in the past. But it would also be nice to know which of those 8 factors (if any) has most influence on the score and whether and how much the current business model impacts that. Does the current UBNT business model fall within the assumptions and conditions that underpin the Beneish M-score? How has the new product and larger distribution pipeline impacted the score? What has changed since the days of -4? Someone can explain that, I’m all ears. Otherwise it is tea leaves.
My 10% concern comes from the possibilitiy that Ubiquiti can screw up the distribution channel with the new products and larger distributors. I put zero weight on the fraud aspect. Arrogance and inexperience? You bet. Been there, seen that a couple of times with UBNT. And, who was it, Hain-Celestial that spent several quarters trying to untangle income recognition from distributors??? I bet they had several layers of CFO-types.
My intention, now four hours before the market opens, is to be a buyer. How much, how soon? don’t know. If Pera is not going to defend on his end then I should probably let the bears run the floor for awhile. I don’t NEED to buy, but I can be greedy and I do have deployable cash. Looks like a buying opportunity, but EBIX and BOFI say that it can be a long journey. I still haven’t filled up NVDA and SQ positions. And INST, NTNX…, add some TLND?
KC, just a little long UBNT (anyone need a slightly used nanostation or M bullet or PoE?)