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VOL. 127 | NO. 212 | Tuesday, October 30, 2012

Pera’s Ubiquiti Reports Earnings Next Week

By Andy Meek

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The last time his company held its quarterly earnings conference call for analysts, Robert Pera was asked rather pointedly by one analyst whether he was still going to pull the trigger on his purchase of the Memphis Grizzlies.

Or, Deutsche Bank AG analyst Brian Modoff asked Pera, will you instead stay focused on dealing with the issues facing Ubiquiti Networks Inc.?

But it apparently was a false choice. Because Pera, a 34-year-old CEO and former Apple Inc. engineer, is choosing to do both.

In recent days, Pera cleared the last significant hurdle toward becoming an owner of one of the 30 NBA franchises. The Daily News confirmed Monday that Pera has closed on the purchase of the Grizzlies.

Then there’s Ubiquiti, the communications technology company that Pera founded.

It reports quarterly earnings next week, and analysts will be studying the numbers closely.

Last time, Pera and his top brass warned about near-term erosion to the company’s earnings because of rampant counterfeiting around the world of the company’s products. When it reports earnings Nov. 8, analysts are expecting Ubiquiti to show earnings per share of between 14 cents and 18 cents, with a consensus estimate of 16 cents.

Ubiquiti was a $35 stock a few months ago but closed out last week slightly below $12. In recent weeks, the company has become the subject of lawsuits on behalf of investors over whether the company hid information about its business prior to going public in late 2011.

In August, Ubiquiti forecast lower revenue for the quarter about which it’s reporting next week and said it believed the amount of counterfeited goods in the marketplace “combined with the impact it has on our distributors’ inventory and the purchasing patterns of our customers will impact our business outlook for the next two fiscal quarters.”

The company did note it’s taken “comprehensive legal action” to minimize those effects. CNBC commentator Herb Greenberg tweeted around that time, “I’ve seen a lot and never seen a tech company blame counterfeit goods for its problems.”

In a follow-up tweet, he added: “Of course, the other way to look at $UBNT: They must have a heckuva good product if it’s being knocked off so ambitiously.”

All of that was in spite of the fact the company reported revenue of almost $95 million for its fiscal fourth quarter. That’s an increase of 40 percent compared to revenue of $67.6 million during the same period of last year.

Referring to the recent stock price volatility, the financial website Motley Fool recently noted: “The stock started falling in May, when the company announced that it expected sequential revenue growth to slow dramatically in the company’s fiscal fourth quarter ending in June. Concerns about CEO Robert Pera also weighed on investors’ minds.

“But the real problem hit Ubiquiti in August, when the company gave a far weaker outlook due to extensive counterfeiting of its products in China. … Analyst downgrades followed, and although the company is optimistic that it can rein in the counterfeiting within the next couple of quarters, it will nevertheless put a big dent in Ubiquiti’s growth story. For Ubiquiti to stay close to perfection, it clearly needs to solve its sales problem and get back to a growth trajectory.”

As far as the Grizzlies go, NBA commissioner David Stern praised Pera and his leadership qualities following the NBA board of governors’ unanimous approval last week of Pera’s bid for the team.

“Robert will no doubt bring great energy and passion to the franchise,” Stern said. “He has assembled an ownership group with very strong local ties, and we anticipate that their commitment to the Memphis area will greatly benefit both the team and the community.”

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