Atmel's Job
by: nightly_atml_report (M/East Rutherford, NJ) 05/17/04 09:11 am
Msg: 197336 of 197428
Right now we're seeing indiscriminant selling in the equity markets, which happens from time to time. Atmel has reported outstanding results in each of the past 2 quarters, but this has not made ATML immune to the larger market action. What's an investor to do? I guess it depends on one's convictions.
There has been a major shift in the business planning by Atmel management over the past 4 years. The company has clearly become more "cash and earnings" focused. This year, for example, Atmel will depreciate its plant and equipment to the tune of about $300M, but it will only have about $180M or so of capex. At first glance, an outsider might think that Atmel was not spending enough to support growth, but it looks like revenue will grow about 35% this year - a remarkable achievement without a lot of spending.
Since Atmel just returned to profitability, it may take a few more quarters of growth before the turnaround at Atmel is fully acknowledged by Wall Street. Atmel's job, then, is to continue the growth it has had over the past year. If it does, the stock price will take care of itself, with double digits being inevitable.
Some will argue that it is best to "sell now, and buy back lower, later". It's funny how these postings tend to appear after a drop has occurred, not before. My conviction, though, is that ATML is priced far below its long term value, so no one will be getting my shares on the cheap just because the market is in turmoil. It's a fact that market advances sow the seeds of the next decline, and market declines sow the seeds of the next advance. No one said successful investing is easy. I can wait.
Nightly
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