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Neophotonics ( NPTN) came public in February 2011 at $14 a share, soon moved above the $20 mark, but now trades for less than $4. How cheap is this stock? The company's $96 million market value is just $4 million more than the net cash on the balance sheet? Is this company's technology platform worth just $4 million? Not hardly.

Neophotonics makes optical networking gear used in telecom equipment. It's been a challenged industry as many rivals built too many products, leading to a product glut, right at a time when key buyers decide to hold off placing more orders to reduce their own inventories. Adding insult, Neophotonics derives more than 40% of sales from just one customer -- China's Huawei -- and orders from that company have slowed as well. Neophotonics revenue base, which hit $184 million 2010, is unlikely to exceed $200 million in 2011 or 2012.

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Yet longer-term , improving industry demand should help this company to get back on its feet. Analysts think sales can exceed $230 million by 2013, setting the stage for a move back into positive EBITDA and EPS. For now, investors can take solace in that strong cash cushion and hold this deep value play until sentiment starts to rebound for this broken IPO.

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At the time of publication, author had no positions in stocks mentioned.
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