Tuesday, March 10, 2009

Bookkeeping: Closing AeroVironment (AVAV)

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Wow, a complete mess from AeroVironment (AVAV) after the close yesterday - I've been so focused on the indexes that I have not been looking that closely at individual stocks, but the shorts were correct on this one. The stock is down 32% as I write this to $20.80 but apparently was as down as low as $18.50 earlier in the morning - cripes. I am exiting the the 0.5% position (it was 0.7% going into the day) with a staggering 40% loss on this last piece of the position; thankfully the position size was small but it was a $3500 hit (on $940K portfolio) Today is a day of shame - here is some earnings color
  • AeroVironment Inc (AVAV), a maker of unmanned aircraft systems, posted a 24 percent drop in quarterly profit, trailing market estimates, on higher expenses, and it lowered its full year revenue growth forecast. For the third quarter ended Jan. 31, the company earned $4.5 million, down from about $6.0 million a year earlier.
  • The Monrovia, California-based company now expects 2009 revenue growth of between 11 percent and 16 percent, down from its previous forecast of 20 percent to 25 percent.
  • "Even with our backlog, our view of the balance of the year requires that we lower our revenue outlook for fiscal 2009. This is driven largely by current economic conditions as well as the timing of the receipt and shipment of customer orders," Chief Executive Tim Conver said in a statement.
  • As of Jan. 31, funded backlog was $139.0 million. Gross margin fell 16 percent for the quarter. Cost of sales rose 24 percent, while research and development expenses jumped 26 percent.
I will say I am confused by the guidance since this company is so reliant on the US government - the whole thesis here is the government would not be cutting back, but apparently their non government business must be suffering. Either way, my thesis is incorrect so I am exiting. Not sure who exactly has a safe revenue stream anymore - all the ports in the storm are being decimated one by one.

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