Jeff, that is a good question with respect to wafer costs and I guess it depends a lot on whether the foundry agreements are priced in yen or dollars. If priced in yen it hurts, if priced in dollars, it is a non event. We should get the answer to that question. However, like any company that derives a significant portion of its sales from foreign sources, a weak dollar helps even if all sales are dollar denominated, because it allows the company's products to be more competitive in foreign currency terms.
My concern with the dollar is that it gets too weak and causes foreigners to pull funds out of our markets, thus causing interest rates to rise and our stock market to fall. Rising interest rates and a falling stock market will eventually hurt our economy and corporate earnings, which in turn will cause stock prices to fall further.
Xicor is on a clear path of several quarters of sequentially increasing sales and profits as long as the economy and the semi industry stay good. I will say it again, the risk in this stock is that the economy and/or industry turns down. You don't want to own this stock or any stock if that happens.
On the technical side, this dip has more mo than I originally thought. Contrary to what some are saying, the high volume on this move down is good as all we are doing is moving the stock from old blood to new blood. The faster that happens (high volume) the sooner we can resume the move up. When stocks drift on low volume, that is the kiss of death, as sellers want out and there are not enough buyers to take stock from them, so the stock just continue to grind down day after day. If we could have closed stronger and higher in today's range, I would have suggested that today was high volume capitulation (That is what I though yesterday was and now have tire tracks on my back). Our weak close near the bottom of today's range, would suggest that the sellers are not finished. However, IMO, any purchases in the $6-$8 area will look good six months from now. |
