The issue of fixing/updating existing equipment. In the earnings release they said this can cost 10 to 20 million. I guess most people believe they will not make such an announcement, but I'm not sure. Here is what we know:
1. Quality issue found early July.
2. Production stopped
3. I'm sure the defective products made it into the field, otherwise they would not even mention that there may be a potential cost to fix!
4. So, if the quality issue was so important that they had to stop production, why would they not want to fix that issue in the field? They would be foolish not to fix (company reputation would be tarnished)
5. There must be a large number of defective units in the field. If not, then why did they estimate 10 to 20 million to fix. They could of said 1 to 5 million, so they know the extent of the problem!
6. So, if they announce a 10 to 20 million cost to fix this problem? Well that's 25-50% of their revenue for the quarter. The stock will tank big time! I don't want to be holding this stock if that happens.
7. Bottom Line: Too Risky!

Note: I don't short stocks. I'm just giving you my risk/reward analysis as a long.