| Facts to consider at these prices |
(a) We have visibility (as in new products which will most likely make the current shortfall temporary), limited downside even when going by targets given by shorts, a whole new cycle of a just-being-born consumer product, the recordable DVD, which even shorts acknowledge will be a big hit, and 17 million shorts who have to Buy to cover if they are to turn paper profits into real profits. Listen to Buffett, he holds his through thick and thin and buys on weakness. Short-sellers want u to not only NOT buy on weakness but to sell on weakness.
(b) This is what happened here. Currently, most DVD players are equipped with one servo and one MPEG-2 chip per unit, which individually cost around US$5-7 each. Mediatek rushed their integrated chip this quarter (sells for around $12) and it became a big hit with Chinese DVD OEMs as it ends up saving them 10%-12% in overall production costs. It is a temporary situation which will soon be resolved.
(c) ESST has spent more on R&D for DVD than anyone else, mostly on the upcoming integrated DVD chip and on the recordable DVD chip. Wait till they uncloak the results of their R&D, possible world-beating chips. biz.yahoo.com "We believe we will maintain our leadership position in the areas of new products, features and services through the introduction of our Vibratto II product, an integrated DVD system-on-a-chip, our new Visba3 integrated VCD chip, and our ESS 7010 encoder chip for a sub-$300 priced recordable DVR/DVD”
(d) Intelligent short-sellers will not risk betting against the three upcoming products, particularly when now faced with very limited downside in ESST. Look at what happened to TTWO. Lots were short but they saw new and quality products coming out they covered and fled. Cohodes seems to have personal issues and may not cover ever -- showing hatred for longs on the Yahoo board, suing them. Same thinking as with TTWO, where he pooh-poohed the excellent upcoming products and refused to cover with the nimble shorts. messages.yahoo.com
(e) The shorts themselves suggested bottom prices: Clarion said $8 in Forbes, so we are below the price he suggested shorts should cover at. Cohodes in Barron’s said book-value of $4.67. They have over $4 in cash (http://biz.yahoo.com/p/e/esst.html ), no debt, and are profitable. What could be a more solid reason than these that a bottom is near?
(f) Even short-sellers acknowledge DVD-R will be a monster of a product, as consumers replace each VCR on earth with the DVD-R. But Cohodes says that ESST is “no where” in DVD-R and suggests LSI is what should be bought for that. I have challenged him to explain why he says this but no real response, only some back-pedaling. It is obvious he is posting this bogus “research info” under the aegis of Rocker to have people not buy ESST and to sell at the bottom.
messages.yahoo.com
(g)Progressive Scan is becoming a standard feature in DVD-players, and is a must if u have a digital TV or plan to get a digital TV down the line. Only ESST and ZRAN provide this feature. Just having P-scan makes ESST’s upcoming chips ahead of Mediatek integrated chip. So with a superior chip with Progressive Scan and other new features, customers could come flocking back. Half the DVD-players selling on American shelves are P-scan. If u go to Circuit City or Amazon websites they ask at the top whether u want one with Progressive Scan.
(h)ZRAN not getting into China. ZRAN is not making headway into China -- their statements in last Conference Call about Chinese New Year not going to boost sales this year, unlike last year, and their dissing the Chinese in their recent presentation show their frustration there. Chinese OEMs have beaten the Japanese in DVD. ESST will continue to dominate as the supplier of superior, premium-tech chips despite the temporary glitch. MediaTek is second-rate technology compared to ESST and ZRAN.
(i)When shorts start covering their humongous number of shares or any good product news comes out this could shoot up like TTWO did, even with Cohodes holding tight to each short they have. |
