Bookkeeping: Closing Telestone Technologies (TSTC)

I am going to dump the last 0.1% exposure in Telestone Technologies (TSTC) - I wanted to hold the stock until I saw the earnings report.  Overall the report was fine, as the stock had a huge quarter of 50 cents and finished the year at $1.21.  But based on guidance I thought the company would do 60+ cents - hence without delving deeply into the report I assume margins were squeezed somewhere along the line.

• Q4 2009 revenues increased 129.2% to $33.0 million vs. Q4 2008
• Q4 2009 net income increased 56.6% to $5.2 million vs. Q4 2008
• Q4 2009 EPS increased by 56.3% to $0.50

The raw numbers are obviously quite outstanding taken in a vacuum but expectations were high.  Also the company's main balance sheet issue, "improved" but still is ugly compared to any other company I know - that is the ability to collect monies owed to them:

• As of December 31, 2009, Telestone had $89.0 million in trade receivables compared to $62.1 million as of December 31, 2008. The Company was able to reduce its days sales outstanding (DSO) from 553 days to 358 days.

Guidance was for another year of 50% growth in 2010:

• Telestone has provided 2010 Revenue Guidance of at least $108.0 million in revenues, 50% growth year over year.

But right now with 90% of stocks over their 50 day moving averages - there is simply no reason to hang around in the 10% of stocks who can't find the light.  I'm sure at some point in 2010 momentum traders will flock right back into the name and it will do its customary +10% in 1 session, but for now it has one big fat ugly red bar to contend with.  I had cut back the name because much like Fuel System Solutions (FSYS) I have a hard time dealing with a stock that trades 8-12% on many days, for no particular reason - that tends to mess with one's stop losses and the like.  While I like volatility, some of these stocks are just too volatile to create a pragmatic game plan around.

No position

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