CKCM

[la-onda]

Click Commerce Reports Delay in Filing its Annual Report on Form 10-K; No Change in Previously Announced Revenues and Earnings
Friday , March 17, 2006 20:13 ET

CHICAGO, Mar 17, 2006 (BUSINESS WIRE) -- Click Commerce, Inc. (Nasdaq:CKCM), a leading provider of on-demand supply chain management solutions, today reported that, while it expects no change in its previously announced financial results, the Company's assessment of internal control over financial reporting could not be completed in time to permit the filing of the Company's Annual Report on Form 10-K by the March 16, 2006 deadline. As a result, the Company today filed a notice with the Securities and Exchange Commission on Form 12b-25 extending the filing deadline for 15 days. The Company expects its assessment of the effectiveness of the Company's internal control over financial reporting, required by Section 404 of the Sarbanes-Oxley Act of 2002, will be completed in time for the Company to file the Form 10-K within the extension provided under Rule 12b-25.

In addition, as required by Form 12b-25, the Company reiterated its previously announced revenues and earnings for the quarter and year ended December 31, 2005, which reflected significant increases in the Company's results of operations from the corresponding period for the Company's quarter and year ended December 31, 2004. Such results were reported as follows: Total fourth quarter 2005 revenues were $18.2 million, representing over 153% growth from fourth quarter 2004 revenue of $7.2 million. Net income was $9.9 million, or $0.79 per share, including a $5.4 million reversal of a portion of the Company's deferred tax asset valuation allowance. For the year, 2005 revenues were $58.7 million, representing 128% growth from 2004 revenue of $25.7 million. Net income was $19.5 million, or $1.63 per share, including the reversal of a portion of the Company's deferred tax asset valuation allowance.

[stocky]

It reads like a statement from RAE Systems, Ticker RAE about a year back. The stock later shed about 60% in a week. But CKCM as a company is no RAE. I would be a buyer if that happens here. But just wanted to share my bad experience with the board.

Technically CKCM is wounded but fundamentally if the earnings remains the same as stated, it is highly undervalued with respect to growth even at current levels.

Disclosure: I dont have any position in CKCM.

[amstocks82]

CKCM hit $31, then dropped to $21 and is now above $23. About the time CKCM was hitting it's highs, it hit a bump and that bump was 1.2 million shares that had been under a lock-up agreement. The lock-up expired and the venture capitalists quickly sold all the shares. Shorts took advantage and shorted and this resulted in CKCM short interest increasing about 500K.

But the bottom is in for CKCM and they have announced several new deals that will start adding to the bottom line this quarter. I therefore expect CKCM to do very well.

The official estimate for CKCM on Yahoo is $19.65 million revenue and $0.26 per share (and that is the high estimate).

My estimate for CKCM is $22.5 to $23.5 million revenue. Non GAAP earnings per share could be as high as 0.55 per share however, this is difficult to predict given I don't know how the company will use their deferred tax assets of $7.11 million.  Before taxes, CKCM's profit could be around $6.9 to $7.1 million.  I don't see any possibility that CKCM will not beat the official Yahoo estimate of $0.26 cents per share by a large amount.

Therefore, I think CKCM is at a good buy in price.

[lerainking]

I think for this quarter institution will look more at revenue and organic growth rather than the ridiculous .26 eps estimate.  Strong organic growth and signs of RFID contracts in the work could be the straw that break the camel's back for short and propel us forward.  Another thing I am hoping for is a well known analyst to follow us so that it may lend some credibility to our company.  At this current price ($22.28), I will buy more on Monday since I feel strongly that it will be $25+ before earnings are release.  About a month before 4th quarter release it was around this price before climbing to a high of $31.

[amstocks82]

We are three to four weeks from when CKCM will likely release earnings. When CKCM had low PEs like it does now, it typcially has an earnings runnup that might start anywhere from two weeks to 3 days before earnings.

I would be surprised if CKCM is not above $25.00 before going into earnings and if CKCM meets my earnings expectations, then I think it will likely go up a lot after earnings.

Time will tell!

[logocovet]

I've been holding CKCM since the mid teens and will continue to hold.

Before I read Michael's recommendation on CKCM, I wasn't aware that it was an RFID play (like a Symbol or Zebra).

The company also doesn't really present itself as an "RFID" company.  If you read its profile @ Yahoo Finance, RFID is only mentioned briefly in passing. 

I think if CKCM presented itself as an RFID innovator, it would do wonders for the stock price and attract new investors and publicity. 

Anyone else feel this way?

[Melf Elf]

I think if CKCM presented itself as an RFID innovator, it would do wonders for the stock price and attract new investors and publicity.

Anyone else feel this way?

logocovet,

I don't have any opinion about that, but I was studying CKCM yesterday ahead of earnings and noticed going back to late 2004 that its response to earnings  establishes the trend in the stock until a couple of weeks/days ahead of the next earnings report.

Both amstocks82 and lerainking recently mentioned $25.00, which is pivotal, technically, for the upcoming earnings.

amstocks82:

I would be surprised if CKCM is not above $25.00 before going into earnings and if CKCM meets my earnings expectations, then I think it will likely go up a lot after earnings.

lerainking:

I feel strongly that it will be $25+ before earnings are release. About a month before 4th quarter release it was around this price before climbing to a high of $31.

Before we get to the $25, a quick review of the response to earnings since late 2004:

1. October, 2004. - The response to earnings was a rally of 360%.  That trend remained in effect until just a few days before the February, 2005 earnings report.

2. February, 2005 - The response to earnings was a big gap down, and that trend remained in effect until several days before the May, 2005 earnings report.  CKCM lost 61% during this period.

3. May, 2005 - The response to earnings was a big gap up, and that trend remained in effect until the August, 2005 report.

IMPORTANT NOTE:  Observe how that May gap took out the March high.  "Gap and Go" above there.  That kind of response might come into play at $25 with this earnings report, which I will explain later on.

[Melf Elf]

1.( EDIT: August, not June.  Sorry.)

August, 2005 - CKCM topped a week ahead of earnings.  The reponse to earnings was a big gap down below a H&S Top that had a "nonexistent" Right Shoulder (we discussed that last summer in this folder).  That trend remained in effect until the H&S Top target of 13.55 MADE within three cents, three weeks ahead of November, 2005 earnings.

Observation:  Knowing what we know now, whoda thunk that CKCM could have dropped 53% into that October, 2005 low?  But, it did.  A case of the technicals trumping the fundamentals. 

Great buy there, logocovet.  Applause.

2. November, 2005 - CKCM broke out above the neckline of an Inverse H&S pattern, three days ahead of earnings.  Michael (Mike) made a great observation when CKCM gapped higher on earnings that, in mirror image to the H&S Top, there was a nonexistent Right Shoulder in the Inverse H&S bottom formation!  The market can be very-y clever.

The Inverse H&S target of 23.48 MADE right at the gap up on the earnings report.  That trend remained in effect until the February, 2006 earnings report, albeit with some downside in December, toward the gap. 

The rally from the October, 2005 low to January, 2006 was 130%.

On the heels of those two H&S patterns, CKCM has formed two more of them.  Coming up...

[Melf Elf]

1. February, 2006 - CKCM topped out a couple of weeks ahead of earnings.  Its response to earnings was to break below a H&S Top above 25.00 (pattern in blue).  That trend has remained in effect since February earnings.

That entire H&S Top pattern (in blue) forms just The Head of a much larger "possilbe" six-month H&S Top (pattern in red).

Observations:

1. Notice that after selling off from the break of the H&S Top after earnings, CKCM rallied back to 25.00 price break, and failed right there.

That's why I said, initially, that 25.00 is pivotal as we head into earnings.  25.35-25.40 is key resistance here.

2. Picture if at earnings, CKCM is called higher, at something like BID 25.20...ASK 25.40.

   

To picture what that "could" look like, literally, go back to the first post and look at CKCM's response to May, 2005 earnings, when it gapped up to the March, 2005 high on a "Gap and Go" rally of a total of 243%.

3. Also picture if at earnings, CKCM is called lower, at something like BID 20.10...ASK 20.30, below the neckline of this "possible" six-month H&S Top.

   
While that doesn't seem possible, based on the fundamentals, look back at last June, 2005, when CKCM gapped down and went to 13.52.

Although this sample isn't large enough to be statistically significant, given the recent history of this stock's reaction to earnings and how that trend tends to remain in effect for most of the quarter following the earnings report, I'm going to pay attention to that.

Anybody know when CKCM reports?  Thanks in advance.

[aero]

Hi Melf

Earnings May 9th though you probably know that now. Contracts wise they are really ramping up. Wal mart stated they are going to really ramp up RFID and intend to make $6 Billion savings in inventory. They are a client of CKCM.

Fundamentals excellent. Could gap to $30 day of earnings and then run from there.
Huge short position in the stock. Could we see another TZOO.

Problem is that gap at around $19 people may be very nervous of that if it touched there at some point before earning may allay some fears.

[Melf Elf]

Hi Melf

Earnings May 9th though you probably know that now.

aero,

No, I didn't know that, and I've been wondering.  Thank you for that information.  Applause.

Problem is that gap at around $19 people may be very nervous of that if it touched there at some point before earning may allay some fears.

Interesting that you should mention that gap and $19. 

I was thinking that it would be a great Bear Trap if the "Mini" H&S Top target: 19.36 IN PLAY got MADE before earnings, "if" CKCM could recover, scramble back above the broken neckline of the larger November, 2005 - April, 2006 H&S Top, then take out Key Resistance at 25.40 on good earnings.

HUGE Bear Trap, if that happens ("trapping" players into thinking it was bearish, when it wasn't, thus, a "Bear Trap.")

BIG "if" at this point, though. 

Thanks again for the earnings information.

[lerainking]

Hi Melf,

Thank you for taking the time to give us your technical analysis.  If the pattern holds and we have a positive quarter (according to the market), how far do you think we can go before the  2nd quarter earnings release?  I notice that last year we hit a low of $8.51 and only
four days later reach $16.27 after 1st quarter release.  Currently, the stock price is around $21 so I am hoping for some short covering before May 9th so that we may pass that pivotal $25  pps like you mention.  It seems like they are trying to drag this as low as possible during times of low volume.

[Melf Elf]

If the pattern holds and we have a positive quarter (according to the market), how far do you think we can go before the  2nd quarter earnings release?  I notice that last year we hit a low of $8.51 and only our days later reach $16.27 after 1st quarter release.

lerainking,

CKCM knows how to rally, and you give a good example of that, so "the sky's the limit"  if the market likes the earnings.

Currently, the stock price is around $21 so I am hoping for some short covering before May 9th so that we may pass that pivotal $25  pps like you mention.

Yes, getting above that Right Shoulder at 25.40 is  pivotal.  Otherwise, this chart looks very bearish with the "nested" Bearish Head & Shoulders Tops (the H&S Top in blue is "nested" within the larger six-month H&S Top, which is the pattern in red).

My apologies for how difficult this chart is to read, but I wanted to show you the gap from May, 2005, at 11.55.  The current six-month H&S Top measures well below that, if this pattern gets broken on the downside.  Gaps can remain on a chart for a long, long time, but I want to point out that, pattern-wise, there definitely is the risk of filling that gap if CKCM doesn't come up with the goods at earnings.

On the upside, if the earnings are well-received and CKCM can take out the $25 ,and then during the quarter, take out the high of 31.06, the height of the H&S Top pattern is ADDED to 31.06 to derive the upside target that would be IN PLAY.

Math:

Top of the Head is 31.06
The neckline data point when that high was made is roughly 19.97

31.06 - 19.97 = 11.09 points ADDED to the 31.06 Top = Target: 42.15 IN PLAY

Targets only are what a particular pattern suggests that we're "aiming for."  Stocks can fail to achieve a target, or they can exceed them by a wide margin.  CKCM could go much higher.  It rallied 243% from the low before May, 2005 earnings, and 130% from the low before November, 2005 earnings. 

It seems like they are trying to drag this as low as possible during times of low volume.

The Bears have the advantage here, as the chart stands:

1. They were rewarded for correctly shorting the break of the H&S Top (pattern in blue) at February, 2006 earnings, at 25.35 (or for shorting CKCM at anything above that neckline).

2. They were rewarded again for shorting the early April re-test of that pattern break in the $25 area.  "Former support 'should be' resistance," and it was.  Technically-speaking, they played it correctly.

"Sell and/or sell short on rallies to known resistance."

3. At Friday's close of 21.37, they have 4 points of "cushion" before they're in trouble (they're in trouble above 25.40).

4. They have a six-month DOUBLE H&S Top in place, and they know that if they can break the neckline to the downside, they've got six months worth of bulls who will be in a losing position, many of whom will want to sell, which is to their further advantage.  They profit by prices falling. 

Bulls realize all of that, which would account, at least in part, for the low volume "going nowhere" activity in the stock recently.  Bulls likely are feeling some apprehension about taking a new  long position  just ahead of earnings in a stock that is known to have very volatile responses to earnings, especially when the current price is so close to that neckline, below which "hell yawns."

There isn't much "room to be wrong" here for anyone taking a new long position.  The technical breakdown of the neckline is only about seventy-five cents below here.

Based strictly on the chart, the Bears are very well-poisition to win this one, going into earnings (there still are six or seven days of trading, howver).  Any perceived weakness in earnings, "hell yawns below" if that neckline is broken, especially if it's on "try to catch a piano thrown off the top of a building" kind of volume to the downside that we've seen in stocks that disappoint on earnings.

But, on the upside, you also can see why I said last weekend:

2. Picture if at earnings, CKCM is called higher, at something like BID 25.20...ASK 25.40.

   

To picture what that "could" look like, literally, go back to the first post and look at CKCM's response to May, 2005 earnings, when it gapped up to the March, 2005 high on a "Gap and Go" rally of a total of 243%.

I would have to think that would be an absolute panic for the shorts. Similar to the gap up on May, 2005 earnings.  They would have "stayed too long at the fair" in their short position, and would be nailed on a gap up like that.

Thanks for your input, lerainking.  Applause.

[Melf Elf]

After being almost lifeless since the April 3 failure at 25.40 resistance, yesterday, the bulls pulled off at least a "minor coup":

1. Bullish Engulfing candlestick that closed above the prior SEVEN days' closes.

2. Monday's high was 22.08, then CKCM reversed lower, and closed at 21.32.  Yesterday's closed was 22.09, a reversal higher on a closing basis, by one penny.

3. The down trendline (brown) off the 25.40 high came in yesterday at 22.10.  CKCM rallied above it to 22.25, then closed just a hair below it, at 22.09.

The release of earnings is at 9:15AM next Tuesday, May 9.  If the bulls can follow through to the upside here on yesterday's nice candlestick (volume was weak, though), the bears will have less "cushion" with their short postions, the closer CKCM gets to $25.40.

CKCM    $ 22.09    
Click Commerce Inc.    
Shares Short   3,761,150    
Days to Cover (Short Ratio)   10.6    
Short % of Float   40.05 %   
Short % Increase/Decrease   -1.48 %   
Squeeze Ranking™   462    
Price % Change (52-wk)   108.93 %   
EPS   1.63    
PE Ratio   13.10    
Sector: Technology    
Industry: Internet Software & Services    
SI Record Date   2006-Apr    
Exchange   NSD    
   
Data provided without warranty.   

   

   

[Melf Elf]

Shorted CKCM at 22.75.  Stop: above 24.00.  Risk: a loss of 5.5%.

CKCM broke below the neckline of the BIG H&S Top near the open and also took out the prior low on the neckline, 20.30.  Shorted the gap filling rally.