Dale, I see we are together in both good (BNGO) and
bad (QNTM). Have you closed out your QNTM yet, or
are you hanging in with the rest of us who know too
much to let go of such a good stock even while it drops
40%?
In looking at QNTM and being a little frustrated that
it is treated like a DD stock instead of a storage
company (i.e., DLT), I decided to look at companies
whose revenues are directly tied to DLT. These are the
DLT library makers: ADIC, ATLPA, and OVRL, plus a decent
fraction of STK's bottom line.
I decided to play ATLPA, in part based upon the spin-off
of shares by ODETA. I bought ODETA and got 1.1 shares of
ATLPA in a tax free dividend. I have sold ODETA at a good
profit (60%) to what I felt I was paying for it. However,
ATLPA has dropped into the toilet since Hong Kong Monday and
is not recovering. Trading at 20 times trailing earnings,
15 times FY 98 earnings (March 98), and 11 times FY 99
earnings, it is pretty darn cheap for a company with
projected 5 year growth of 30%. We know from QNTM that
DLT is growing very fast and is almost a de facto standard.
ATLPA has good contracts with EMC, Data General, and just
increased capacity to keep up with demand. Some folks on
the ATLPA thread have spoken with the CEO of ATL and find
him to have only good things to say. The one worry I
identified is that CPQ has started making DLT packages, but
they don't have anywhere near the sophisticated software
of ATL.
Yes, it is hard to go long in this environment. But when
things do pick up, ATLPA deserves and should get a considerably
higher multiple. I'd pick it for 50% appreciation in 4 months.
jg |
