I find it interesting with all the selling that Eagle Asset Management, the largest holder, has increased its position to 2.023 million shares, according to Bloomberg. They purchased 410,410 in the latest quarter. By the way, since January they have essentially doubled their position from about a million shares.
Regarding the 3rd quarter, the market seems to be forecasting doom and gloom, but, according to Red Chip, the company will have revenues of 18.75 million and earning per share of 5 cents. Another analyst at one of the brokerages following the company has estimated approximately the same, 18 million in revs and eps of 5 cents. It was also indicated that management sees indication of a strong 4th Q based on the growth in backlog of 810 and 812 DST products.
Both sources indicated that, as the Red Chip put it, "....the Company should also benefit from the recent addition of a royalty payer, thereby increasing recurring royalties and decreasing operating expenses...."
When I first read that, I assumed that it referred to royalties from the VCR and camcorder markets and most likely it is. However, on reflection, it is interesting to contemplate the other possibilities.
It could also be royalties from the licensing of keepered to Maxtor. After all, the Maxtor agreement gave favorable pricing to Maxtor for 3 years, but Ampex can terminate or alter the agreement if Maxtor does not purchase certain minimum quantities by specified dates prior to March 31, 1998. Remember also that the contract was for inductive or MR.
I talked with Maxtor in mid March and they confirmed that their interest in keepered was significant because the areal density increase would allow them to take out a platter and two heads and save $30 per drive.
I think one could conceive that Maxtor wanted to fly under radar vis a vis their competition and Ampex was not permitted to disclose or was not even informed if keepered was incorporated in their drives.
MaxMedia, the new platter company formed by Hyundai to supply Maxtor began production mid 1997 according to the Maxtor web. Also, according to an article 6/15 in the Denver Post, Maxtor is supplying drives to eight of the ten top computer manufacturers in the world. "About a year ago, it worked with two manufacturers and concentrated mostly on distribution channels." In the same article, "......Cannon expects Maxtor to be profitable by the fourth quarter of 1997"
Pretty impressive progress and clearly a strategy of increasing market share.
Unless Maxtor has totally changed strategy, we should see keepered revenues by March and not late next year as the market seems to be forecasting.
The other possibility re the royalties is from the licensing of the over 40 patents that Ampex has identified as being used by TV manufacturers. |
