All, a few comments on APM's situation.
First, I think no one really knows what's going on here. Even the analysts are guessing when it comes to even next quarter's earnings. There is a lot of negative sentiment, which in and of itself may be a bullish indicator. There is no denying that the small float and huge short position (even taking into account the convertibles) could give a huge boost.
All the bad news is out. Can it get much worse? Not really. I think the Barron's article just shows how much confusion there really is. From that, it would seem that analysts think that APM is so far behind on MR that they will really never recover. The case, as I understand it, is really that APM has a comperable MR head (to RDRT's) and is simply working out the inevitable bugs as they try to ramp.
See this also, which higlights the confusion. I found it on the WDC page.
And on top of that, they've been slow to migrate over to magneto-resistive [heads]. Their head supplier, Read-Rite, is not giving them good-quality yields on the high-end components that they need to make the transition. Quantum has bought the effective worldwide capacity (all of which is coming out of Japan at this point from TDK and Yamaha), and so on top of the secular decline, they have not executed as well as Quantum on the MR tranisition. Quantum is therefore gaining share.
Does this analyst really sound like she knows what she's talking about? Not to me. But that's not the point. The point is that if this is what people think, then the stock is a good buy because they are probably wrong.
I am very tempted to sell on the open on Monday. I bought at 38. I have a huge loss. But APM could very well go lower. The reason I have decided not to sell is because the bad news is out. Peopl clamoring for a press release, consider this. There's one coming in a week or so. The 10Q!!! This is where I look to for hope. In the best case scenario, APM discusses their situation with MR and reminds everyone that this last quarter was some normal problems but things will get better...
Brian |
