Hello Addi. I still read the ADIC thread but I feel very sad for you guys. I started getting out of ADIC this summer but didn't finish in time and took a big hit when the big drop came and sold my last @ 10.25.
I will add my thoughts (since you asked about me) but have been reluctant to do so because I know how you feel about getting hammered and the last thing you want is for someone to tell you what a bad stock this is.
First, the earning of 0.08 are really less than that because van Oppen had previously stated there were some significant sales and earnings which should have made it into the previous quarter but which got kicked into this last one by a computer glich. So, maybe they made 2 or 3 cents. Also remember that this was the quarter they were going to have the big Dell earnings. So sales are down, and earnings are probably currently below break even.
Next, if you chart what ADIC has done the past two years and what ATLPA did you see that ADIC has consistently lost ground to their competitor. Also, this has now become a commodity type business so it is my belief that it has passed its high growth stage and will never command a high PE again.
Finally, if any are still considering buying, please go over to the Yahoo! news and read about the completion of the EMASS deal. I think that it was a disaster. ADIC drained the large cash position they had (and took on debt) to get $64M additional annual sales but apparently no additional profit. So now the company must run itself with almost twice as many sales and no apparent profit. This seems crazy. Also note from the EMASS report the following:
<<<REDMOND, Wash.--(BUSINESS WIRE)--Aug. 19, 1998--ADVANCED DIGITAL INFORMATION CORPORATION (Nasdaq:ADIC - news) today announced it has completed the acquisition of the EMASS tape storage division from Raytheon Company [NYSE:RTNa - news].
EMASS, which has significant operations in Colorado and in Germany, had approximately $64 million in revenue during calendar 1997.
Terms of the deal include a cash payment of approximately $25 million and assumption of $2 million in mortgage indebtedness. ADIC also expects to incur certain restructuring costs associated with the transaction as well as a significant one-time expense for purchased research and development. Restructuring costs will generally be capitalized as liabilities related to the cost of the acquisition while the purchased research and development charge will be reflected as a non-recurring expense in ADIC's financial statements for the quarter and fiscal year ending October 31, 1998.
''We expect that the EMASS business will be rapidly interwoven with our existing businesses to provide customers with the most comprehensive and competitive set of products and services available in our industry,'' van Oppen said. ''Excluding the effect of non-recurring, non-cash charges associated with the acquisition, EMASS should immediately begin to contribute to our revenue and provide modest improvement in earnings. Over the next few quarters, we expect the combined business to show significant improvement in both revenues and earnings,'' he said. >>>
Note that there will be a charge in the quarter ending Oct98. That will be released mid November. In other words, next quarter will not be very positive, so you must wait until at least 1999 for a positive result to start. It will take two or three quarters for Wall Street to be a believer. And what happens at the end of November to a stock that has fallen this far? Yes, tax loss selling.
So, my scenario (and I admit I have been very wrong on ADIC before) is that the stock modestly recovers but falls again in November with next quarters release. Then it really falls at year end. If you or others really believe this is the stock you want it is my guess that you will get it very cheap during the last two weeks of December. I feel that it will see $6 or $7 much before it will see $16 or $17.
For your sake, I hope I'm wrong. But this stock wore me out and I doubt that I would ever buy it again. Addi, I really wish you my best. |
