<<Johnathan, this isn't about APM really, is it?...Long RDRT and short APM, are we?>>
If I had to choose one stock to hold through the next 6-12 months I would choose RDRT. This is not so much because RDRT's future is so good, but because APM's looks so bleak. There is a good chance APMs long term future may turn out to be brighter then RDRTs if it can be as efficient at producing MR as they were at TFI. But that is not at all assured. I WAS long RDRT on a technical basis. I'm not now. In fact I was considering going short RDRT friday on technicals but I think the risk is to great considering that RDRT could announce a deal with SEG any day now.
I am short APM on a fundemental basis. So im not just spouting off. I put my money where my mouth is. I don't forsee holding this short more then 30 days. I'm hoping APM will have found a bottom by then and expect it to settle down till earnings and the next bomb is dropped.
<<However 1) the MR development .vs. RDRT doesn't appear that far off,>>
This is not the impression I am getting. But that just my impression. I'm thinking that the timeline for converting there fabs completly was about a yr difference.
<<maybe what happened is that WDC lost its nerve when the 1.7 yield didn't immediately show well.>>
This is my understanding also.
<<I don't know that RDRT supplied any 1.7 heads, just that they've given up on producing them.>>
I didn't think that they ever had that head at all. To be honest I don't follow RDRT that close.
<<So, is this a technology (1.7 tfi) that APM must write off?>>
This is a really important question. I don't know who else besides WDC ever got these heads. If APM is having a hard enough time making enough for WDC I doubt they would be supplying them to others at the same time and lose their biggest customer.
I hear WDC is droping them ASAP. For WDC, "ASAP" is the fastest in the industry. I understand they are the best at retooling and redirecting their fabs quickly.
<<Ok, you say its only qtr-by-qtr that matters.>>
Yes I do. Ask anyone thats been holding APM when last qtrs results were released and they will testify too how much a qtr matters, e.g. affects the portfolio.
You make some valid RDRT to APM comparisons. Let me emphasize I am not so much Pro RDRT as I am Con APM. I've done 50 times more research on APM then RDRT. So im not going to be able to give you a rebutle. But maybe an entertaining thought or two just to help you understand why people seem to be pro RDRT and down on APM.
First, I don't think profit margin means much unless it shows in EPS. APM has had higher margin but still RDRT manages to make more EPS over the long run. APM seems to have done their best while pushing the limit of efficiency. RDRT has done their best without pushing the limit, and so has room to improve.
Second, APM is trending down and RDRT up.
Third, RDRT is percieved as a market leader, and APM a laggard. Its hard for the market to get excited about a laggard.
Fourth, RDRT made their numbers, APM did not.
Fifth, RDRT communicates with shareholders, APM does not.
Sixth, APM is entering the dark side of the MR transition, RDRT is entering the bright side.
From a short term technical perspective, RDRT had broken through a double bottom at 19.5 not long ago. Thursday formed a very bulish hammer signaling a reversal. But I did not see as much follow through as I had hoped on Friday so I closed my long thinking that it would just butt its head against resistence at 19.5 and go back down. But today it has suprised me and closed above resistence. All RDRT holders should breath a big sigh of relief. This is a good sign but well see if it holds as support. This is very bold of RDRT because this 19.5-22 range is where it was before they annouced that they would not meet estimates this qtr. And they did not annouce by how much they would miss estimates so I would think there would be a fair ammount of FUD(fear uncertainly and doubt). On the plus side I see someone on the RDRT suggested that WDCs demand for TFI had previously been holding back RDRT and now that WDC is going full on MR RDRT can show its stuff.
APM was 1/8 a point away from forming a Dark Cloud Cover candle stick today. Even though it missed it in the strict sense, I am not religious about candle stick charting and I still think it means APM is likely to go down tomorrow. Rudy, on the other APM thread is thinking that APM might bottom out at around 15. I was impressed with his early call of APMs distruction and so I respect his opinion. Of course, he also suggested to me a couple weeks ago that if he were me he would hold it around the 24-25 level. But the fact that he still wasn't willing to buy himself in at this level revealed to me that he didn't really "believe", and I sold at 25.5. Thank you Rudy. This only strenthened my respect for what he says.
APM and RDRT have had an interesting interplay this last week. A couple times they have been the same price, and right at that moment it's as if the market says "Hold it right there buddy!" and APM quickly goes down and RDRT back up, as it should be. If you see this happen again its a good time to go short APM and long RDRT to scalp a quick point or more in my opinion.
If you really want the opinion of people who understand the industry then the Disk Drive Discussion Forum is the place to ask. And if you want informed opinions on APM, and what being an APM shareholder is like, then go to the other APM trading forum. I don't think any of those guys hold APM any more, but maybe thats a pretty clear signal.
By the way, if you guys, like T.G.W, disagree with my opinions don't be worried. I'm not voicing them cause im so sure about them. It because I want to bounce them off other people to double check myself, and to study the reaction and hear others POV. I want to learn stuff just like everybody else. Together we can prevent duplicating our efforts.
Jon Bird |
