No, I did not mean to suggest that Art Z mislead anyone. Yes, I think he may have underestimated the severity of the DD problems. He said in the cc that the capacity had just gotten ahead of itself a "little bit" but would recover "nicely" over the next two quarters. Well, Seagate did not decide to lay off some employees at one plant in Ireland, but decided to shut it down totally. I do not think this is something you do if you see the problem as two quarter problem. Moreover, Quantum, WDC and Seagate have all been telling more stories about overcapacity in the chain last week. So the DD front end business would seem to have some problems going forward which was and is recognized by UTEK, but the story seems to be getting worse by the day and worse IMO than Art Z had envisioned during the cc.
Yeah, upon reflection, I should have expanded upon that final thought. I was too vague. I was more focused on the "end of the quarter" langauge in that statement in net sales recognition. If the company does a "substantial" part of its sales toward the end of the quarter, there is the possibility that UTEK had not seen the full extent of the "softness" when I talked to them and would not until the final two and one half weeks of December. Visbility is cloudy and its gettin' a little stormy out there.
Some final thoughts. UTEK was bid up during the summer on the prospects of its new products. In fact, there may have been only one or two questions by tha analysts about the older products during the most recent cc. Everyone was focused on the E-Beam and P-Gild and pole trimming. They did not ask one question about that quarter's numbers. They didn't care that UTEK missed. Brett Hoddess let out a "wow" when confronted with the cost savings to DD manufacturers of pole trimming. They tried every trick in the book to get Art to quantify these businesses. No go.
Now, all of a sudden, I think UTEK is perceived by investors as your basic old time stepper company. UTEK is viewed by Mr. Market as an old doormat. You can wipe your feet on it because it has a DD component or becuase it has a DRAM component or you could stomp on it for both reasons. Those new products are viewed as pipe dreams now and Mr. Tax Code gives investors more incentive to sell. Big mistake by Mr. Market; big opportunity for long term investors. I am going to Mr. Market next week to see if he will let me buy some of that doormat. I did not plan to buy anymore but Mr. Market has been too generous in making it available. |
