Shorting stocks: Broken stocks - Analysis Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Q. who wrote (1316)	6/30/1998 9:44:00 AM
From: CMason	Read Replies (1) of 2506

Ben -- My personal view is that book value doesn't mean a great deal for tech companies, absent growing revenues and profits. KMAG (which I am currently short) competes against OEM's who have their own media manufacturing capabilities. In a downturn, such as we have now, I believe these companies will attempt to optimize their own capacity before shopping outside. If this is true, and KMAG's 2nd quarter earnings warning suggests it is, both sales and margins will suffer (as they did in first quarter, resulting in the negative margins you noted). In such an environment, cash will be gobbled quickly by the need to keep the factories running, even at a loss. I don't consider KMAG a "short to zero" stock, but I think it is good for 1-2 points at current levels, with potentially more if the Aisian recession continues and Windows 98 does not generate a substantial increase in PC sales. Just my thoughts, CMason

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next