MIND 3rd quarter CC

[dan_s]

Mitcham Industries, Inc. (MIND) has announced fiscal 3rd quarter results. An updated Net Income & Cash Flow Forecast model has been posted under the Watch List Tab.

> 3rd quarter results were way below my forecast, primarily due to the sale of one Seamap Gunlink system being delayed until Q4 and the $1 million expense of provision for doubtful accounts (ie - an uncollectible A/R).

> Q4 and Q1 results will be much better. Russia, Europe and S. America equipment leasing picking up but Canada market still soft.

> Outlook for more Seamap equipment sales and services revenues looking much better, especially for next fiscal year.

> Subsequent to the end of Q3, MIND invested $29 million in new wireless lease pool equipment. < This is good news.

> MIND maintains a VERY STRONG balance sheet with $56 million in working capital (Current Assets - Current Liabilities) as of October 31.

I have lowered my Fair Value Estimate to $17.00/share, which is the same as First Call's price target.

MIND is rock solid, but it may no longer meet the definition of a "growth company". It is more of a seasonal play for us. The good part of their seasonality is just ahead, so now is not the time to sell. However, I may drop it from the Small-Cap Growth Portfolio (mainly because I need room for some high growth E&P companies on the Watch List).

The primary reason I track MIND carefully is because the company gives me a good idea where the E&P companies are focused on exploration. For example, the increase in spending for seismic in South America is positive news for a company like GTE. The more large-caps looking at South America the higher chance of one of them making a run at taking over GTE.