physicsdh,
I know I said I was going to post less, but I want to address some of your latest comments:
1) Let me set the record straight that I am not negative on the longer term prospects of xicor, and IF they can execute, the stock is still extremely undervalued.
2) You ask why everyone is so disappointed with the record results. I think you know as well as I, that the price of a stock reflects what a company expects to do in the future. As early as last Jan, it was evident to anyone who did their homework that xico was going to turn it around and show significant sequential improvement in quarterly operations as they transferred production to Yamaha. So when they reported Q2 results with with a significant reduction in the loss and only a small amount of production transferred to Yamaha, it was easy to be very excited and bullish about the next few quarters. They had cut the loss in half with only a small amount of production transferred to Yamaha. And as we see, people were bullish and drove the stock to almost $9.
So we get to the Q3 release and see that they sharply increased the margins and turned profitable with 40% of production from Yamaha. But here comes the rub, guess what people, we are not going to transfer any more production to Yamaha and now the gross margin increase that was being built into the stock assuming 100% transfer to Yamaha had to come out. Now in hindsight, it was being taken out before the earnings release (sudden drop from $9 to low $5's) by people that I suspect had better guidance. Why do I say this? Because we know that Raphie had meetings with fund managers and certain analysts during Q3, and if he treated them like he treated us on the cc, they wouldn't have given him the time of day. These people will not put up with a no or weak guidance policy.
3) Why am I so upset with their guidance? For starters, at the time of the Q2 cc, they knew they would have a significant increase in the Q3 gross margins and they knew that by the end of Q3, the transition process would end and that rate of increase in gross margins would slow going into Q4 and Q1 of 2000 (and if they didn't know this, then I think we all should be very concerned about their management abilities). So why didn't they just say that? No they said they would have a slight increase in GM's in Q3 and said nothing that the transfer of production to Yamaha would stop at 40% in Q3.
4) As most of you have figured out by now, I have a real problem with this fab issue. I had over 20 years with a big five firm and I have seen my share off these restructurings. Believe me, these are not black and white, and it is my opinion that they are letting PWC push them around. My firm took a businessman's approach to this area vs a bean counters approach.
5) So now what is their big guidance. Big growth second half of next year. But we can't tell you why. We can't give you a breakout of our sales by product line and where we see that mix going over the next few quarters. We can't give you our B to B. We can't expand on our battery chip product. We can't tell you when to expect the fab write-off. etc. etc.
So we are left to trust this management who gives us limited guidance and their track record of $100+ million in losses during a semi boom equivalent to the industrial revolution!
I hope you can see where I am coming from. I only stay involved with this company because I have made a lot of money with them in spite of all their faults and I intend to make much more in the future. I guess no one said it was going to be easy.
Enough said
SJO |
