Monday, August 6, 2007

Extreme Networks Inc

Extreme Networks Inc is a NASDAQ listed security that has been trading in a range between $3.34 and $4.72 over the past year. With 114,034,000 shares outstanding, a recent price of $4.03 gives a total market capitalization of $441,311,567. While there are certainly larger companies, Extreme Networks Inc has definitely earned its place in the pack. Last year, Extreme Networks Inc created $-0.12 in earnings for every share outstanding.

Extreme Networks Inc is currently priced by the market at 0.00 times last year’s earnings. Many trading multiples around the world are quite attractive these days, but don’t be fooled. A Price to Earnings ratio of 0 simply means that the security didn’t make any money last year.

With a share price under $50 a share and earnings per share below $1 a share, Extreme Networks Inc is unlikely to be an interesting value proposition. Consistent earnings are the key to high valuations and this security is not on its way.