CSR not so funny now

A few weeks back I posted about how I had laughed at CSR's share price collapse after a revenue warning. Well on Tuesday the Q3 earnings came out and a revised downwards Q4 forecast saw their shares drop almost 20%. This time I wasn't laughing.

The question the investor community is asking is how could CSR have got their forecasts so wrong? Having already issued a profits warning only seven weeks ago they have now revised down the Q4 forecast a further 15%. And they are supposed to understand their business?

CEO John Scarisbrick is confident of significant revenue growth in 2007 but can we believe him? If he is right then these shares are an absolute bargain.

On a forward PE of about 10 with revenue growth around 30% the shares look an absolute steal but what about if the forecasts are wrong again?

I am very tempted to average down but my success rate with averaging down is about 0 so I have resisted the temptation so far. There is nothing worse that having a significant proportion of your portfolio is some loser with no upwards catalysts visible within the next six months.

If CSR falls below 600p I may bite but for now I am so glad I took some profits at 1400p. That seems like a long time ago now!