Oh, C-COR (NASDAQ:CCBL), how I want to like you. I've made money from your stock in the past, and I think your IP-based equipment for cable TV companies still holds promise. And yet, your guidance is going down again.
Results for the company's fiscal fourth quarter were actually pretty much as expected. Sales were up about 7% over last year, and the book-to-bill ratio (a measure of new orders received relative to sales for the quarter) held steady at 0.92 (it was 0.94 in last year's fourth quarter). Margins, though, got ground down as operating expenses climbed 64%, and the year-ago operating profit turned into a loss this quarter.
For the quarter, large cable operators Time Warner (NYSE:TWX), a Motley Fool Stock Advisor pick, and Comcast (NASDAQ:CMCSA) accounted for about one-third of the business. The company also confirmed a multiyear global contract with Liberty Media International (NASDAQ:LBTYA), an international cable TV company with almost 11 million customers in Europe, Asia, and Latin America.
Once again, management at C-COR asked for patience, pointing to the difficulties of integrating numerous recent acquisitions and calling this past year a transitional year. OK, that's valid -- but only up to a point. It was management's idea to do these deals, and the recent track record of lowering guidance on several occasions suggests they underestimated what they were getting into.
While small cable equipment companies like C-COR and Harmonic (NASDAQ:HLIT) keep yakking up furballs, larger players like Arris (NASDAQ:ARRS), Motorola (NYSE:MOT), and Scientific-Atlanta (NYSE:SFA) seem to be doing all right. Oddly enough, I take that as a slightly positive bit of news -- it shows that the market itself is growing, and that if C-COR could coax its ducks into a row, there could be growth ahead.
I'm not exactly sure I can recommend this stock without many folks calling for mandatory drug testing for investment columnists. This company has an unfortunate recent history of sliding guidance and a really volatile stock price. And yet. I still want to hold out hope here. I do believe that C-COR has a real opportunity when (if?) the acquisitions are fully integrated and the company can start really running the "new C-COR" in earnest.
Anyone else looking at this stock needs to do careful due diligence and be ready for volatility. While I think there is light at the end of the tunnel, it could still prove to be an oncoming train.
More Foolish takes on cable TV:
- Is Quanta Services Powering Up?
- Set-Tops Set Up Scientific Atlanta
- Sweeter Notes From Harmonic
- C-COR Unplugged Again
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares)
