CSP Inc. ($CSPI) Surges after Reporting Q2 Results " />

Stock Alert for CSP Inc. ($CSPI)

CSP Inc. (NASDAQ: $CSPI)

CSP Inc. (CSPI), together with its subsidiaries, develops and markets information technology (IT) integration solutions and high-performance cluster computer systems. The Company operates in two segments: Systems, and Service and System Integration. The Systems segment consists primarily of CSPI’s MultiComputer Division, which designs and manufactures specialty, high-performance computer signal processing systems for the aerospace and defense markets. The Service and System Integration segment includes the computer maintenance and integration services, and third-party computer hardware and software value added reseller (VAR) businesses of the Company’s subsidiary, Modcomp Inc. (Modcomp). Modcomp is a wholly owned subsidiary of CSPI, which operates in the United States, Germany and the United Kingdom. Modcomp markets and sells its products through its own direct sales force. On September 25, 2008, the Company acquired R2 Technologies, an IT solutions and managed services provider.

CSP Inc. was founded in 1968 and is headquartered in Billerica, Massachusetts.

Share Statistics (5-May-10) FY

2007

FY

2008

%

Chg

Q4 2008 Q4 2009 %

Chg

Symbol CSPI Revenue, $Mn 94.04M 76.78M 18.4% 18.07M 18.12M 0.3%
Current price $4.58 Gross marg. 24.8% 18.2% 26.6% n/a 18.8% n/a
52wk Range: $4.62-2.97 Oper. margin 7.0% -1.9% 127.1% n/a -25.8% n/a
Avg Vol (3m): 4,292 Net margin 4.3% -0.5% 111.6% n/a -19.9% n/a
Market Cap. 16.19M
Dil. Shares Outst. 3.6M EPS, $ 1.03 -0.11 110.7% -0.09 -1.02 1033%

Source: Reuters.com, SEC Filings.

Financial Summary

For the second quarter of fiscal 2010, CSPI’s total sales increased 6.3% to $23.9 million from $22.5 million in the second quarter of fiscal 2009. Net income for the second quarter of fiscal 2010 increased 367% to $989,000, or $0.28 per diluted share, from net income of $212,000, or $0.06 per diluted share, in the second quarter of fiscal 2009.

For the first six months of fiscal 2010, CSPI sales declined 8.6% to $42.6 million from $46.6 million in the first six months of fiscal 2009. Net income for the fiscal 2010 six-month period decreased 57% to $247,000, or $0.07 per diluted share, from net income of $570,000, or $0.16 per diluted share, for the first six months of fiscal 2009.

The Company’s cash and short-term investments were $12.3 million as of March 31, 2010, compared with $18.9 million for the fiscal year ended September 30, 2009. The decrease was primarily the result of a $7.4 million increase in receivables due to orders received toward the end of the quarter. CSPI’s cash position may vary significantly from quarter to quarter due to the high working capital requirements needed to fund large projects at both its Systems and its Services and Systems Integration segments.

Financial Strength (5-May-2010) Company Industry Sector S&P 500
Quick Ratio (MRQ) 2.03 1.25 1.38 0.73
Current Ratio (MRQ) 2.52 1.62 1.63 0.87
Long-Term Debt to Equity (MRQ) 0.00 18.73 18.84 125.63
Total Debt to Equity (MRQ) 0.00 42.39 31.05 186.05

Source: Reuters.com, SEC Filings.

Analyst Consensus

No chart available.

Source: www.ft.com

No consensus analysis data available.

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=CSPI.W

Investment Highlights

CSPI recently announced that its MODCOMP subsidiary in Germany signed a reseller agreement with ArcSight, a leading global provider of security and compliance management solutions that protect enterprises and government agencies. MODCOMP provides solutions and services for complex IT environments that include storage and servers, network security, unified communications and consulting and managed services.

MODCOMP is enhancing its expertise in delivering a reliable, resilient and trustworthy IT infrastructure through ArcSight’s security and compliance management solutions to help it’s German and U.S. customers assess both internal and external cyber threats and risks across the organization and meet compliance regulations.

CSPI’s MultiComputer solutions are open architecture platforms enabling software reuse, portability and interoperability. This approach minimizes both risk and cost. Customers may continuously insert new technologies that address the performance demands of their application while still meeting development schedules and their time-to-market goals.

Since introducing the 2000 SERIES product line in 1997, CSPI’s platforms have been compliant with de-facto standards such as MPI and VSIPL for Real-Time and Linux OS(es):

  • Linux,
  • VxWorks,
  • VXS,
  • VPX,
  • PCI Express,
  • and 10-Gigabit Ethernet.

Source: http://www.cspi.com/corp_main.htm

Technical Analysis

Source: http://stockcharts.com

CSPI’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility. Additionally, CSPI is trading above its upper Bollinger Band. Relative to recent price action, the stock is currently overextended and due for either a pause or retracement.

The MACD for CSPI currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0, which implies that the underlying moving averages are trending higher.

Comparative Analysis

Company Name Ticker Price per Mrkt. Cap. P/E P/S
May5-2010 symbol Share, $ $ Mn 2009 2010 2009 2010
Video Display Corp. VIDE 4.48 37.51M n/a n/a 0.58 n/a
DataMetrics Corp. DMCP 0.01 138.4K n/a n/a 0.04 n/a
Datalink Corp. DTLK 75.45 61.71M n/a n/a 0.34 n/a
Computer Peripherals Median 33.11M n/a n/a 0.32 n/a
CSP Inc. CSPI 4.58 16.19M n/a n/a 0.15 n/a

Source: Thomson Financial

Insider Trading Activity

NET SHARES PURCHASE ACTIVITY

Inside Purchases – Last 6 Months

Shares Transaction
Purchases n/a 0
Sales n/a 0
Net Shares Purchased (Sold) n/a 0
Total Insider Shares Held 798.07K n/a
% Net Shares Purchased (Sold) 0.0% n/a

Net Institutional Purchases — Prior Qtr to Latest Qtr
Shares
Net Shares Purchased (Sold) (173.295)
% Change in Institutional Shares Held (40.4%)

Source: Yahoo Finance

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