Patroller,
"What would the impact be on earning if say the 7000 and 4000 slowed 25% and margins were cut 50%,how would that impact earnings this quarter? And at what price would you think the stock would go to as a result?"
A lot.
I couldn't say off the top of my head exactly how much, though, would have to go back to figure it out. A year and a half ago, in the summer of 96, this stock got down to about 6, which was way oversold. That is the way drive stocks get when the sentiment is negative. Historically, that is also the best time to buy them, when you can't possibly see why any sane person would invest a penny in them, least of all yourself ("you" in the generic sense, obviously). The danger with such reasoning is obvious though--the allegedly sane ones just might be right this time.
Book value is allegedly about $8-9/share. I find it hard to believe that it would go back to book, but strange stuff happens in this industry and this market. Before it broke out last year on its better than 7-fold move (bottom to peak), it had reached about 14 two different times over the previous year or two. I would think that that would be a pretty good floor if (I emphasize IF here) the DLT story is perceived to be "over" in terms of revenue and earnings growth. If DLT is still intact, but if it does have inventory problems that are perceived to be temporary, then I would think 18 would be the floor. If the margins for the 7000 are still intact, and if it is still selling well, then the stock is a buy now, especially with the pukey sentiment on the sector.
sam |
