Westell Technologies, Inc. (NASDAQ:WSTL) entered yesterday’s trading session with a remarkable gap up and headed directly towards its highest for this year price and trading volume. The excitement was huge, but has good chances to disappear in the same hasty manner as it came.The usual turmoils around the latest quarter results release happened yesterday to Westell Technologies’ stock as well. It surged sharply up right after market’s open and retained that high levels throughout the whole day, thus the large daily volatility is due to the low starting point of the stock at the beginning of the day, but not so much to large differences in investor attitude towards the price of the stock.
The total increase was 12.18% and the close at $1.75 was the highest for this year, the same holds also for the 1.1 million trading volume. The financials are not officially filed yet, but were announced in a press release after market close on Wednesday, and considering the current market valuation, investors are optimistic about the sales, but not about the overall value resulting from them. Which might sound strange at first, but actually it is not.
According to the press release, revenues continue going down progressively as they did over all of the four quarters of the last fiscal year ending this March. Further not surprising, the net income has increased further and there are minor changes in the cash position of the company. CEO Rick Golbert spoke about gross margins, but mentioned only modestly what could be the only thing to do in order to progress in the highly competitive and saturated telecommunications business: innovations.
Westell Technologies still does not want to invest and thus its strong cash position is not enough to bring merit to its shareholders and secure something more than a stable, but modest, growth of the net income. No investing that could result in some innovative products and solutions has been done over the past three years, and in each of the sales segments the company relies for more than 50% of its revenues on two major customers, much larger and having all the bargaining power over the terms of doing business with them.
