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John, over the last 3 months, I've been a bull on Cube. But I've shorted it in the past, quite successfully, I may add, and there is a strong bearish argument. In Short: Intense Competition, poor marketing skills, and inept management. The alliance of Lucent, Intel, Microsoft, Compaq and Comcast ( and there is more formidable companies who will join the alliance) will, I believe, ultimately squeeze Cube right out of the marketplace. Down the road, I see Cube as the Apple Computer of DVD. Their doing fine now, because they have the best technology and engineers at the moment. Inept Management: They didn't even realize what ESST did to them in China, until their market share was drastically reduced. I see other blunders down the road. Poor Marketing Skills: Cube is not aggressive enough in marketing their products. They should have alot more design wins at this early stage than they do, for the competition will catch up to them eventually. I am a long term Bear on Cube, but a short term Bull. I view the current rally as a much needed retracement to the drastic decline over the past couple of years. As Cube rallies into the 30's ( or maybe even 40's ), these issues will resurface again and drag Cube down, I believe. As a value player, Cube is approaching fair value for me( its not there yet, however). Long term ( 1-2 years out) the stock is a big risk. Short term: who knows, maybe even 50, but I'll be out long before that point is reached. |
