Westell New Management Assessed

Westell Management Realigns with Financial Report

Westell Technologies (WSTL - Analyst Report), a provider of broadband access products and conferencing services, recently declared financial results. Earnings were essentially in-line with our earlier quarterly earnings forecast. The company also announced a new CEO and CFO, along with the appointment of two independent board members.

For full fiscal 2009, total revenue was $170.4 million, down 18.3% year-over-year. Gross margin was 30%, remaining flat with margins attained in fiscal 2008. Adjusted diluted EPS (excluding extraordinary items) equated to a loss of $0.16 per diluted share in fiscal 2009 compared to a loss of $0.04 per diluted share in fiscal 2008. At the end of fiscal 2009, Westell had approximately $46.1 million of cash and short-term investment and no outstanding debt on its balance sheet.

Westell’s strategy to transform its legacy products into next-generation platforms targeting fiber-to-the-home and broadband access markets may generate revenue growth should industry conditions improve. The stock is currently trading below its net cash position, but we do not expect Westell to achieve profitability anytime soon.

We maintain our Hold rating with a higher valuation target as we assess new management and their initiatives to reposition the company.