Crystal, don't you understand that when the market valuation was some 18 trillions, this was not "real money", no real money is destroyed, only the overvaluations that were in that market. Do you realize that in the last year, the total losses (operational losses, taking out the $57 B "write offs" of funny money by JDSU and probably another $100 B of other companies) of the Naz stocks equals all their earnings in the last five years? Go back five years and that is what the value should be. I don't think we will get that low, but clamoring that AG destroyed liquidity is a fallacy. In that case, AG is like God in Job, The Lord gave and the Lord took it away, may the name of the Lord be blessed, just transcribe it with AG, AG gave those trillions and AG took them away.
As for PALM, do yourself a favor and look at the numbers, they have a book value of $1.29, how long will it take for them to accumulate profits so their book value will be that magic $63? At $63/share, their market cap will be $35 Billions, how long will it take before their sales could reach $35 Billions? That number, at about $100 per unit sold represents 350 MM units per year about as much as cell phones are sold yearly, and they have quite heavy competition, not just domestically, but from Japan and Korea (and if the competition is not there yet, it will come). Finally, PALM had to borrow $150 MM (asset based borrowing), and their current burn rate annually, is such that the $500 MM in cash may not last much long. I believe that their SG&A plus R&D comes to more than $500 MM/year, their sales last year was about $1.5 B and their gross margins (without the big write offs) at around 30%, so they are barely positive cash flow, few more bad quarters and more pricing competition, and guess what, they go negative cash flow. I am not saying that PALM might be a good play here, but assuming that it will go to $63 anytime in the next ten years, is IMHO, fantasy.
Zeev |
