If tonight I invent a car that runs on water, is made out of plastic, costs 1/2 as much as comparable cars, but it needs one special expensive component from AMCC, and I sell the rights to this car to Ford tomorrow, and they tool up to make it and can sell all the can make, would that make AMCC more valuable?
According to your thinking the answer would be no, because Ford probably wouldn't grow. The people buying my wunder car wouldn't be buying one of the current gas guzzlers and Ford would have to sell twice as many to meet revenues.
That's a bit of what's happening with telecom, everyones in depth junk analysis is that the overall slowdown will effect everyone the same. Well at least it should make some decent bargains. Just because NT has slower growth doesn't mean all it's supplier companies do. Their old technology will not only slow in growth, it will slow on absolute terms and cease to exist, as it's supplanted by more and more fiber. The companies that make the old components are the ones whose valuations should get squished, but Wall Street being a herd mentality, and the herd always taking the safe path, has decided to smoosh all telecom valuations. You seem to be part of this herd. Not saying AMCC isn't still very expensive, but to say it's overpriced because telecom capex slows is incredibly naive, and unfortunately incredibly commonplace.
CMB |
