07:40 AMCC Applied Micro Circuit highlighted positively in Barron's (4.6 )
Barron's highlights Applied Micro Circuit, which traded back in 2000 at a market value of $29 bln, a modest 230x earnings, 66x sales and 24x tangible book. These days, the stock can be had for a bit less, $4.60, and the market cap is a somewhat more sober $1.4 bn, or 1.6x tangible book. Last fiscal year on sales of $131 mln, the co lost $105 mln. But after 12 qrtrs of red ink, the co is expected to break into the black this qrtr. And for all of this FY on projected revs of $310 mln-$320 mln, the co is expected to earn something around a nickel a share. Moreover, even after several synergistic acquisitions that nicely expanded the co's scope and customer list, Applied Micro still boasts a slug of cash, roughly $1.50 a share, and not a cent of long-term debt. Which is no small reason why even in the darkest days of the telecom collapse, the co was able to spend mightily on R&D. Last FY it laid out a whopping $112 mln for R&D, or 85% of sales. According to the article, the business is back on the upswing. In the F4Q revs jumped 24% sequentially, 136% yoy. Backlog climbed 30%, and the co announced a slew of design wins from key customers. Scott Black, who runs Boston-based Delphi Management, can't resist buying a first-rate tech outfit at 1.6x book and 3x cash. He believes all that R&D spending is about to pay off and reckons Applied Micro may well do better than the Street anticipates. He pegs net at 5 cents to 8 cents a share for March '05, and 25 cents to 28 cents for March '06 and sees the stock as an easy double in a year or so.
07:39 MERQ Mercury Interactive upped to Buy from Hold at Wells Fargo, tgt $60 (45.39 )
Firm recognizes that there has recently been overall market weakness, particularly in high-beta technology stocks. However, firm is making a fundamental call on the stock and believes recent weakness presents a buying opportunity. Firm notes that it has a high degree of confidence in its estimates, which are at the high end of management's forecast range. |
