Here's another explaination for yesterdays decline. A stocks price is
basically a reflection of the "markets" discounted value of future earnings.
The future is not clear to anyone and inefficiencies do exist.
Yesterday the F.C.C. approved channels for High Definition Television.
From NY Times "Digital television will offer super sharp high definition
pictures on a new wide screen, as well as six channel digital audio systems.
Since the transmissions are digital, the new television sets will take on
many characteristics of a computer, providing interactivity with broadcasters
and cable operators, as well as a range of digital services that are now being
devised." ...."At the same time, direct broadcast satellite dishes already
receive digital programming and that can easily be shown on the new digital
television sets. But the satellite industry has announced no plans to offer
high definition programming. High definition signals are more complex, so
they require more bandwidth. As a result, satellite systems would have
to reduce the number of channels they offer to provide high definition
programming."
This was the news yesterday in the industry. The other news was Diamond
Multimedia's problem, but I doubt this was a major factor. I think the
"market" sees HDTV as a threat to Cube's future DVD earning. Also, the
satellite comment seems negative for Divicom.
I'm long Cube and see this a temporary reaction to yesterdays news. I
would want a DVD player to go with my HDTV set and digital camcorder. I want
a DVD ROM on my PC. I'm not sure how it all fits together in the future,
but that's what makes things interesting.
OK. Near term, Management is upbeat, Company has announced quite a few new customers,
new products, Divicom "wins" and DVD wins with Samsung and Awia. Earl Aikens
told me a few weeks ago that JVC, Toshiba and Panasonic are sampling Cube's
DVD chip. Earl also said policy is to only announce wins when shipments have begun.
Cube is the only company (I think) with an actual one chip DVD solution. Based on earnings,
Cube now sells for about 15X trailing and 12X 1997 estimated earnings.
It really seems to be quite a good value at this price.
I'm holding on to my investment.
Regards,
Richard |
