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Technology Stocks : Speedfam [SFAM] Lovers Unite !
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To: Dennis G. who wrote (2690)2/6/1998 6:12:00 PM
From: Michael Burry  Read Replies (1) of 3736
 
I've already detailed my prob with SFAM

exchange2000.com
exchange2000.com

But of all things, this announcement shouldn't make the
price fall (although of course it will). Did any one here
not expect a shortfall? We knew about Asia. We knew about
lowered capital spending in the industry.

Still, institutions inevitably freak when the obvious
is actually announced (it takes this kind of news to
make them notice their investment again). The big red flag for
me was when I read the Jan 8 Online Investor SFAM article that noted
analysts had only dropped estimates a nickel - obviously
they weren't dealing with reality yet. It's why I listed in my
recent Investor article (Out-of-Sight Value - a nine step
guide to value investing) as one step "never let your buys
anticipate bad news."

On a more fundamental level, how about the concerns I listed
in those previous posts - no one here ever addressed them
(it became a great business once the stock started moving
up, I noted). Is there an endpoint to the capital spending
and R&D? What is the growth rate trough-to-trough in the Speedfam's
cyclical business? Positive accounting earnings in the face
of continued negative cash flows should not cut it for
intelligent shareholders.

Good Investing,
Mike
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