Thursday, August 2, 2007

hi/fn inc.

hi/fn inc. is a NASDAQ listed security that has been trading in a range between $4.34 and $8.45 over the past year. With 14,076,230 shares outstanding, a recent price of $8.20 gives a total market capitalization of $115,425,083. While there are certainly larger companies, hi/fn inc. has definitely earned its place in the pack. Last year, hi/fn inc. created $-0.39 in earnings for every share outstanding.

hi/fn 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, hi/fn 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.