Why ShoreTel, Inc. Shares Sank

Is ShoreTel's drop meaningful? Or just another movement?

Jan 24, 2014 at 5:56PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of ShoreTel, (NASDAQ:SHOR) plunged more than 11% Friday after the company turned in decent fiscal second-quarter results, but provided lower-than-expected forward revenue guidance.

So what: Quarterly sales rose 13% year over year, to $84.5 million, beating expectations for sales of $83.15 million. That translated to non-GAAP net income of $0.05 per share, compared to a $0.04 per share net loss in the same year-ago period. By contrast, analysts were modeling adjusted earnings of only $0.03 per share.

In addition, ShoreTel projected revenue in the current quarter should arrive in the range of $80 million to $85 million,  the mid-point of which sits below analysts' average expectations for sales of $84.19 million.

Now what: The top-line guidance miss certainly wasn't all that alarming. But it's evident that the market was hoping for a more pronounced turnaround, especially considering shares are still trading for 38 times next year's estimated earnings. In addition, keep in mind that ShoreTel is still unprofitable based on generally accepted accounting principles. As a result, until ShoreTel can both pick up the pace and prove it has what it takes to achieve sustained long-term profitability, I prefer to stay on the sidelines.

Consider the six amazing growth stocks in this free report
If ShoreTel's turnaround doesn't quite whet your investing appetite, you're in luck!

Despite skeptics saying it couldn't be done, Fool.com co-founder David Gardner has proved them wrong, time, and time, and time again, with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently, one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market, and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information

Compare Brokers