Ann: OKN MARKET UPDATE , page-10

I would have to think that the sell-off has been a little overdone - price at announcement [Nov 16th] = $3.10; down 26% to $2.30 at Friday 26th close. That's approx $75million of company value wiped away in ten days.

With Exec chariman Paul Holyoake owning 8million [or 8.88%] of total shares himself, that's a cool $6.4million his net wealth has taken a beating this November.

(Interesting comment made earlier in the forum about Director's remuneration.... Maybe just compensating themselves for their capital reduction. More seriously, I agree the huge uplift is difficult to justify but sadly, not an uncommon phenomenon in business today. Hopefully, they go some way to justifying the dollars in 2011).

Re-reading the announcement however, the Oakton board continue to re-iterate that 2011 full-year revenues and EBIT will grow from 2010 which was already a much better year [P&L, Balance Sheet and Cash-Flow] than 2009.

It has better than sector average results, vis-a-vis:
1/. Return on Equity of 20.9% [sector ave. = 15.8%], rank 21 out of 65 Software & Services stocks;
2/. Return on Assets of 14.2% [sector ave. = 8.2%], rank 11 out of 64;
3/. Year-on-year growth in EPS of 37.1% [sector ave. = 17.0%], rank 4 out of 22;
4/. P/E of 10.9 [21.0], rank 15 out of 36.

Per Bell Potter....
"The weak trading update primarily relates to poor management delivery, given improving IT markets. While disappointing, the issues can be addressed, as opposed to contract disputes, staff turnover of 30 per cent or write-downs, as was the case last year. A number of steps have been taken to rectify underperformance such as changing the sales team and the appointment of a chief operating officer to oversee the turnaround".
Target Price $2.90.

Recommendation: BUY


I would expect to start to see a bounce back in price this coming week or in the run-up to year-end.

The only unknown is where the legal case with Tenix is going. Does someone know something and not telling? Would like to know why Paradice sold down 1.5million shares to fall below the 5% significant shareholding level - so any further sales do not need to be reported by them [indeed looks like they are continue to sell-down based on significant volumes].
However, on the flip side, who's buying?

Assuming the legal case is not a lay down misere against Oakton, the current price looks like a buying opportunity to me.

Naturally, I reserve the right to be wrong.
Good luck to all.