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Technology Stocks : Oak Technology (OAKT)
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To: The Joker who wrote (3987)4/4/1998 11:59:00 AM
From: AreWeThereYet  Read Replies (1) of 4335
 
Joker,

Profit Margins are shrinking: True
Competition is increasing: True
But imo the stock is undervalued due to its low P/E and P/S ratio and a healthy balance sheet. The stock is suffered now mostly due to 3 reasons:
1. The street doubts if OAKT will successfully migrate its CD-ROM controller business to DVD.
2. Price pressure on ASP of ATAPI controller from new competitors.
3. The correction of chip-industry occurred last October.

The poor sales/marketing of OAKT has disappointed me. I don't expect OAKT to have the same dominance in DVD market as in CD-ROM (60% market share) but 20 to 30% shouldn't be a big problem and that already means 300M+ revenue with higher gross margin. In addition the transition from LD/VCD/VHS to DVD and CDR/CDRW to DVD-RAM will open lots of opportunities for OAKT. The future is there; the problem is if OAKT can improve its marketing.

aC
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