Opinion on  China Expert Technology Inc. (CXTI)
Investors expecting more bad news from China Expert Technology (CXTI.OB)

On July 27, 2007, China Expert Technology : CXTI.OB Chairman and Acting CFO Huang Tao promised investors in a conference call that: (1) there would be no financial discrepancies when the company reported Q2 results; and (2) that results should be announced by August 15, 2007. At the time, I believed that the company’s conference call would help calm investor fears over the departure of CFO Simon Fu. Boy was I wrong.

After a brief rise in the days that followed, CXTI shares resumed their death plunge. They now trade at $2.78, having lost almost two-thirds of their value in the past two months.

Both retail and institutional investors are dumping shares hand over fist. The company’s largest shareholder, Jeffrey Feinberg’s JLF family of funds, continues to sell even at these depressed prices. JLF’s sales may indicate that it knows something we do not. On the other hand, it may just be prudent trimming of an overly large position in the wake of increased uncertainty and turbulence.

One thing is certain: the company will not begin to heal its rift with investors until it publishes financial statements and hires a real CFO.

DISCLOSURE: Long CXTI.OB.

China Expert Technology: CXTI.OB filed an 8-K today announcing that it has elevated the controller of a major subsidiary to the CFO post recently vacated by Simon Fu:

On August 15, 2007, the Registrant appointed Qiyou Li (Jeff), age 38, as Chief Financial Officer. His appointment as Chief Financial Officer was appointed by the board of directors, and is pursuant to a written employment agreement containing basic terms of employment.

* * * *

Biographical Information. Qiyou Li (Jeff) was appointed as CFO of the Registrant on August 15, 2007. From September 2005, to the present, Mr.Li has been the financial controller of Expert Network (Shenzhen) Co. Ltd., the Registrant’s wholly owned subsidiary, and was responsible for all financial, accounting and internal auditing. From October 1999 through September 2005, Mr. Li was the financial manager of ZhongQi Power Technology Company, where he was responsible for the establishing and maintaining the budget for the headquarters and for seven subsidiaries. Mr. Li holds a Bachelor degree from University of Jiangxi Finance and Economics.

If the company reports within the 5-day period allotted under its automatic extension, and if there are no surprises, I expect that shares will appreciate considerably. If not, we could see $2.50 again.

DISCLOSURE: Long CXTI.OB.

... Read the rest of the original post >