Anthony first mentioned it... a section called "DVD Dead" in Individual Investor's Contrarian column, October 1997 issue. The point was to trash Zoran but it managed to pull CUBE into the muck too. Mentions slow DVD rollout, piracy concerns, lack of a single technical standard, and other known issues. What was troubling:
"When--if--DVD does become successful, Zoran will have plenty of competition from better-known rivals including C-Cube Microsystems and LSI Logic. (Incidentally, shorts have piled on C-Cube.) Despite what Zoran and its rivals may say, downward pressure on pricing will prove intense. As video functions become ever more important in home computing and entertainment, the big boys will move in. Look at Intel's recent acquisition of Chips & Technologies, a video-chip maker, and Motorola's entrance into the Dolby audio-chip market."
The piece concludes with a recommendation to short ZRAN:
"We expect one of two scenarios: DVD never takes off, and this one-trick pony comes up lame; or it succeeds, and its high-margin chips become low-margin commodities... Zoran is optimistically valued."
Note that when this was written, ZRAN had already been beaten down to $18.25 (now in the 24 vicinity). It's worth reading the negative viewpoints out there--if only to dismiss them. |
