Commentary : Herb on TheStreet*Extra* Now Maybe Ancor Really Should Change Its Name to Anchor
By Herb Greenberg
Senior Columnist
1/7/00 2:41 PM ET
More from the fundamentals (eventually) do matter department: Next time you decide to buy a company because you hear that Microsoft (MSFT:Nasdaq - news) or Intel (INTC:Nasdaq - news) has bought into it, remember the lesson of Ancor Communications (ANCR:Nasdaq - news), the fiber-channel switching company whose stock at last check was down 12 7/16, or 22%, to 43 1/2. The decline occurred after Ancor's chief cheerleader, Ashok Kumar of U.S. Bancorp Piper Jaffray, told his company's salesmen today that revenue for Ancor's just-completed fourth quarter will miss his estimates.
In a voice mail today to Piper's brokers (which I heard), Kumar said that Ancor's shipments of products to Sun Microsystems (SUNW:Nasdaq - news) have been delayed and won't show up until the end of this quarter, at the earliest. Piper has no underwriting relationship with Ancor and has a "buy, aggressive" rating on the company's stock. Ancor officials did not immediately return a call for comment.
Herb's Latest: Join the discussion on TSC Message Boards .
That's old news to readers of this column, which has previously pointed out the likelihood of glitches with Ancor's Sun business. Ancor, of course, is no stranger to this column or to our TV show on Fox. During the predictions segment on the Nov. 13 show, I said that "my sources tell me that the company ought to change the spelling of its name from 'A-N-C-O-R' to 'A-N-C-H-O-R' to show what's going to happen to it."
No sooner did I say that than the stock rocketed, and I was left with a Hostile React-o-Meter that was spinning out of control. You should've heard the hooting and hollering (directed my way) a few weeks later, when Ancor announced that it had struck a deal with Intel to develop new switches based on a new type of architecture called InfiniBand. Ancor traded at 62 7/8 the day before the announcement; the day of the announcement, it zoomed to 85 7/8.
But as an item here pointed out at the time, the Intel $14.8 million deal really wasn't that big of a deal. Ancor's deal with Intel was one of many out of Intel's $4.8 billion venture fund. What's more, Intel paid a steep discount for the shares, and the deal wasn't exclusive.
That's not all: I also pointed out that a source close to Ancor competitor Brocade (BRCD:Nasdaq - news) told me that Intel approached Brocade a year ago in Intel's efforts to develop its own proprietary technology in this area, but Brocade decided to focus on fiber channel. "We decided to take a wait-and-see attitude because we're not convinced InfiniBand will make it," the source said.
Point being: Stocks that rise on air fall hard when the blower is turned off.
Oh, and by the way, this column's Greenberg Effect Index, which includes Ancor, is off about 12% since its inception on Dec. 15. Ancor, a large component of that index, has tumbled 47% in that time period |
