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Technology Stocks : Applied Magnetics Corp

APM 1.350

+2.3%

3:58 PM EST

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To: Rational who wrote (10591)	12/4/1997 9:32:00 PM
From: Jonathan Bird	Read Replies (1) of 12298

Sankar, If the stock traded at 40% of the then book value, the market then had over-reacted to APM The market always seems to over react doesn't it? I think it will always be this way. That is what the sneaky short seller exploits to make money. The 40% book value example I gave you was from '94 and the company had lost over 2 bucks that year. I believe it was during the transition to TFI. I'm not even thinking that things might get that bad for APM. But it is kindof scarry to realize that that is what happens when a technology transition goes wrong. In that case they were to early. And here we are at another transition. yikes! Feel that fear and uncertainty? Its driving the stock price down. It doesn't matter that it may be irrational. A more recent example would probably be in '96 when the stock traded as low as 130% book value after APM earned .10 for qtr. They were able to patch it up the next qtr with record earnings, so it didn't have a chance to go lower. But I sincerly believe we are looking at the posibility of at least to ruff qtrs for APM. The second probably being worse then the first. I calculate APMs book value now to be 9.4. If we were to get a 130% book value we would go to 12.22 share price. WDC's cutback will affect APM's earnings, but not as much its gross margin because WDC must have negotiated for some cost of getting the TFI from APM. I have no idea what your saying right here. After all, APM has been a trusted parts-supplier of WDC. Do we have information that WDC will get its MR from someone else? Yes they were pretty tight. Last I heard 44% of APM heads went to WDC. But RDRT is WDC's biggest supplier. And it would seem that this is even more the case now. So many unknowns with this stock. In the end we are all speculating more then we would probably like. But I still think the longs are speculating more then the shorts. Jon Bird

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