Lone Bull -
It's nice to see you still have some enthusiasm left.
I personally think that is why the stock price is slowly
working it's way down(some people just find the whole
situation hard to stomach and are holding the price up)
Just a few comments about your recent post:
<<I think I've figured out where the -.78 came from>>
Your #s work out, but the ANALysts are better than that.
Some of them might be bozos, but they're probably better
than you and me. And they have access to a lot more info.
You have to start giving them some credit IMO.
As much as I hate to admit, crunching the #s to forecast
earnings is very tough, esp with little guidance from the
company. I do believe they do make a decent attempt
at it.
I've posted before that I cannot figure how they arrive
at ($0.78). But it's a # somebody is comfy with, I'm convinced
they don't make them up. Also, remember, the estimates will
NOT include one-time charges. I think we can assume the
following in a model:
1) R&D will be AT LEAST what it was last Q $14.8mil
probably a lot more going fwd. They have to increase it.
2) SG&A will be around $2mil(withing $0.1mil)
(They can't reduce it much, it's only $0.06/share now)
3) They won't pay ANY taxes!!
4) Net Sales will be around $80mil
We do not know:
1) GMs?
2) Interest and other Exp?
We could probably work out what the other income value
would be, maybe. But it pales compared to the contribution
to earnings that GMs make(unless you are right about all
of the credit transaction blah de blah - you tell me what it
should be). GMs will be the key this Q. It's impossible to
predict IMO without real knowledge/guidance for the Q. Most
other companies I follow give you a target GM, but Crisman
won't give that to us. Let's try to figure out what the ANALysts
are assuming it will be.
Given the above values, I have to make the GM = (4%)(negative)
That was hard for me to swallow because I've got a lot of info on
a lot of companies and cannot find one Q that has negative margins
for the company. It makes sense really. Why sell something
at below cost. Well, the only way I can figure it, the canceled orders
bit them. They paid rent, kept the lights on, paid the employees,
bought material to produce $120mil worth of heads for the Q. Once
the orders were canceled, the fixed costs bit them and they lost $$.
On the other hand, the loss may come totally from extra R&D
exp during the Q. You mentioned at one point that they might
reduce that. I say they will raise it significantly.
That's all a guess of course. I'm fitting the inputs to the data so I
could make them read anything. But let me tell you this, if I make
GMs = 26%(last Q) APM makes only $0.13 for the Q. And they
won't have GMs that high. My guess is they'll struggle to see
double digit GMs this Q(And my money is on negative GMs).
The quicker transition to MR, the struggle with MR yields, the
struggle with the 1.7TFI yields and the cancelation of the high
margin 1.3GB head has cost them dearly on GMs.
I really don't doubt the current expectations, but my max
would be maybe ($0.40) for the Q. My money is riding on less.
Even if APM comes in above the ($0.78) I don't think you'll
see a big bounce. The street is looking for news now, everyone
expects they will lose money, the question is whether they can
produce high density MR in volume. They haven't proven that,
or even talked about it recently. It's news you need now, not
a little less loss than expected. If they twiddled the books to
make $$ in the credit biz, then that's not going to help the value
of the stock really. It'd be like a one-time charge. No real
change to APMs ability to make $ in the future. A big credit
may boost the stock for a short while, but the informed will stay
out until they see progress.($5mil in MR rev is not progress)
Don, they're not stupid. The only way they were going to increase
the MR customer base was to qual then produce MR heads in
vol. They did not. And it wasn't because they could and still chose
not to pursue the customers. (If they did, that's an even better reason
to bail out of the company!!) They HAVE NOT produced MR in volume
because they cannot produce them at a cost competitive with RDRT
or TDK or IBM. WDC is their only current customer because they were
the only ones willing to buy the older TFI heads.
todd
BTW, regardless of the outcome, NO time was wasted in the research
on APM; yours, mine, anyone. If I'm wrong, I'll learn from my mistakes.
Meanwhile, I like your input. It makes me think, work and try harder.
Think of the contacts you've gained, the methods learned and
the people you have come to know. I for one think this is the perfect
excuse to use the internet.
I like your tenacity. |
