*AV*--Almost forgot but I didn't<GGG>
Radar Trader Newsletter
High Tech Commentary-- Scan List
August 27, 1998
OPENING COMMENTARY FOR AUGUST 27, 1998 - Andrew Vance
TIMELY TOPICS
REXI and CYBG still continue to show weakness today with each losing ground in price. REXI was a successful short even though it appeared no stock was available. The more these 2 go down, the more they are worth watching for a bounce back up down the road. With drops like this you need to expect a bevy of lawsuits to be filed, as they have.
CIEN shares moved slightly higher after ABN AMRO maintained its "buy" rating on the telecommunications hardware maker. Citing strong fundamentals, this comes the day after the TLAB board adjourned a meeting without comment on its pending acquisition of Ciena. Kenneth Leon, ABN AMRO's analyst, said in a research note that CIEN's still a "buy" for the aggressive investors. Leon, predicted that CIEN shares will gain 5 to 15 percent in the near term and sees it rising 10 to 25 percent even with the loss of the T business.
TLAB-Strong BUY out of CS First Boston today. Lack of comment by board could mean a revised exchange ratio to CIEN and/or rethinking or additional researching of CIEN's future prospects beyond AT&T's recent decision. With a revised price for the deal it is still even money that the merger takes place.
AMAT still rated as a 'buy' despite closing down 6%. This comes one day after they announced a 2,000 employee RIF (reduction in Force) and take a fourth-quarter loss related to the charges incurred for this RIF. Needham & Co. analyst John W. Pitzer, maintained his "buy" rating and anticipates that the company will begin a recovery by the fourth quarter of 1998 or the first quarter of 1999. Total restructuring costs could approach $150M or $0.26 per share but it would create a breakeven of $600M per quarter. If, as some say, order rates are bottoming and the upcoming Dec quarter may exhibit a slight sequential uptick, it might be prudent to seize on any weakness in the equipment sector in the next 12 weeks to take a few positions.
VTSS-seems to have caught the eye of CS First Boston again today relative to their V-FRAME 2.5 family of chipsets, designed to handle data framing and 16:1 (de-) multiplexing physical layer functions for 2.5 Gbps ATM over SONET equipment. They expect several other versions of the V-FRAME family in the next six months for datacom and telecom applications.
FORE down 22% after announcing it would buy Berkeley Networks for $250 million.
LBOR dropped 3 1/16 to 18 1/2 on unconfirmed reports of questionable accounting methods. The stock is down 37 percent over the past 6 trading days.
LSCC plans to open an R&D facility in the United Kingdom. They plan to use the new facility for manufacturing programmable integrated circuits. The new fab is supposed to open early in 1999.
COMS announced a new line of US Robotics modems specifically designed and manufactured for PC original equipment manufacturers. COMS owns the biggest piece (36%) of the OEM modem market.
CMVT closed up today after the company reported second-quarter earnings, ahead of the First Call consensus estimate. The computer and telecom systems manufacturer posted record sales, 25% higher compared with the year-ago period.
DELL-up 4 5/8 to another all-time high by elated investors.
KOPN-may have its first profitable quarter as device wafer sales continue to grow and as their sales to Rockwell appear to be firm. their CyberDisplay is selling at capacity and production is ramping up to levels approaching 15,000 units/month. Additional capacity for this product is being investigated in Taiwan.
Ralph Acampora (Prudential Securities) said that value "in big names" could be created in September and October, when major decline trends start to break.
SOX-The Philadelphia Semiconductor Index dropped 3 percent while the Morgan Stanley Technology Index of blue-chip issues dropped 1.3 percent.
The Department of Justice is investigating whether Microsoft tried to steer Intel away from Internet technologies.
Healthcare and Utility stocks represented the 2 sectors that showed gains. Healthcare improved as investors flocked into drug shares, a safe haven in unsure times.
Japan's banks are have a huge amount of nonperforming loans after the country's bubble burst in real estate, among other assets.
CBOE said its ratio of put option volume to call option volume was 0.86.
RADAR TRADER RST SCAN LIST COMMENTARY FOR AUGUST 27, 1998
CYCH(10-11/32, +1 5/32)-Traded just under 10X average daily volume and was the subject of a highlighted explanation a few days ago. Apparently the confidence of the CEO must have spilled over to the investment community. The CEO nets a 12% gain for his show of confidence. It also doesn't hurt to have the impact of the IBM announcement that was linked yesterday to settle in on the minds of the investment community. This comes on the heels of announcements of a slowdown towards e-commerce as the banks consolidate and get their acts together on this matter. (See previous commentaries for the stories and links.
THDO(3-29/32, +1/32)--On the list once again but little activity. Plenty of time to read past commentaries.
AKLM(7, +3/16) -Very little activity but appears once again today with the exception of a news release that stated that their WWF War Zone game earned the top slots in the
Video Game Competition for sales in August.
MPRS(5-3/4, 0)-- Very little activity but appears once again today.
OAKT(3-7/32, +1/32)-this company has been on a 1 year decline from $12.375 to its present $3.22 level. Very little activity here and a definite bottom flat zone of $3.00 to $3.50 has been reached. OAKT has appeared on this list a few times already. Prior to today, the last noteworthy news was its posting of its 4th quarter $0.12 loss versus a $0.06 profit in the comparable quarter last year. Year end earnings were $0.14 vs. $0.55 a year earlier. Early today the company announced the completion of their acquisition of Xerographic Laser Images. Also earlier in the day another release announced that Oak Technology was partnering with Japan's leading Home video products manufacturer, Orion, in the area of DVD technology. Oak Technology, Inc. designs and markets high-performance semiconductors and related software for the optical storage, consumer electronics, and digital office equipment sectors. This is accomplished through original equipment manufacturers (OEMs) worldwide.
biz.yahoo.com
biz.yahoo.com
APCC(33-1/2, -1/4)--In a down market this seems to be holding its own.
SMTC(16-1/2, 0)-Much ado about nothing here. Semtech Corp. reported second-quarter earnings in line with analysts' projections yesterday. SMTC reported net sales of $25.5 million, compared with $24.5 million in the same period last year. Net income for the quarter was $2.5 million, or 16 cents a share, excluding a restructuring charge. Last year, the company. From the looks of the news release below, they are making money, have a nice backlog, etc. One would think this is a bright spot in a rather dreary sector these days but it has been met with a ho hum attitude.
marketwatch.newsalert.com
WIND(40-1/8, -9/16)-early in the trading session the company released a news item stating that Patriot Scientific would start placing the Wind River Operating System on Its powerful PSC1000 Microprocessor to accelerate the development of the chip, and make it marketable much sooner.
VTSS(33-7/8, -1/2)-chart for this stock has been positive since January of this year even with some slight minor pullbacks. A nice review of this company has been previously provided along with an opinion as to how they differentiate themselves from other IC manufacturers and what they offer relative to present and future products making their way to the mainstream. As a positional trader, VTSS is one of my more favorite stocks worth considering for the long term.
NOVL(11-5/8, -5/16)-volume trailed off today to barely less than its average daily volume. Still very close to a 52-week high, we might assume that it is now catching its breath on a down day in the market. Previous commentaries highlighted the attractiveness of this company making it worthwhile to follow and determine its suitability as a positional trade.
SNPS(31-9/16, +9/16)-First time I have seen this on the list. No real news but worthy of a description of what it does. Synopsys, Inc. supplies electronic design automation (EDA) solutions to the global electronics market. They provide comprehensive design technologies to desiigners of advanced integrated circuits, electronic systems and systems-on-a-chip, along with providing consulting services and support to customers. This support is meant to shorten and simplify the overall design process and accelerate time-to-market for new designs. For more info, visit: www.synopsys.com.
CYBX(6-5/8, +5/16)-Passive new member to my stock universe from watching a few daytrades of this stock. Down significantly from the $32.625 high around the beginning of April, they seem to have taken the short cut to these present levels. I honestly thought it had found a home around $12 the first two weeks of August. Then the uncharacteristically high volume came in crushing the stock to its present levels. I am trying to see if we have a new comfort zone for this stock and to determine what it will take to jumpstart this stock again. The big drop in price came on the heels of the 4th quarter earnings report. Even though sales were up 15X from the previous year's quarter and 10X year over year, the company reported a larger loss this past quarter than the comparable quarter last year. I guess it is not a good sign when sales are up 15 fold and you widen your losses. The daytraders seem to enjoy taking this stock for a few fractions every so often. I am waiting for the signs of a recovery before deciding whether a positional trade might be in order.
MCRL(36-1/8, -3/4)-Loss today was not as bad as it could be given the entire semiconductor sector was under fire and a great deal of downward pressure.
LEVL(21-9/16, -1/16)-Admittedly, I am stumped with this company. The are a fabless semiconductor company that relies on IC wafer manufacturing foundries to produce their IC devices. A refresher on what they do is concisely reprinted from their standard company press release section that outlines their business "Level One Communications provides silicon connectivity, LAN switching and WAN access solutions for high-speed telecom and networking applications. These components are critical elements in today's telecommunication and data communication networks and are the key building blocks for the Intranets and Internets of the future. Level One combines its strengths in analog and digital circuit design, with its communications systems expertise, to produce digital and mixed-signal solutions with increased functionality and greater reliability, resulting in lower total systems cost."
Given the economic conditions in Asia, these guys should be raking in the money on favorable wafer pricing for their products. With all the excess capacity out in the market, LEVL should be sitting in the drivers seat. The following link was already published but worth highlighting again. This dates back to July 21st but it still timely. "Level One Communications Reports Record Quarterly Bookings and Revenue" "Second Quarter Net Income, Excluding One-Time Charge for Acclaim Acquisition, Increased 115%" biz.yahoo.com
AND NOW A WORD FROM THE RADAR ROOM:
A prolonged slump in IC sector is now being brought forth in an untimely manner by analysts. A day late and a dollar short for these people. This is old news. They are now saying that the AMAT announcement dashed hopes for improvement in the semiconductor industry, which suffers from overcapacity. Where have they been?? As much as 3 quarters ago, equipment companies have been tightening their belts, reducing payrolls, and taking charges related to the downturn, caused by the economic upheavel in Asia.
A real Gloom and Doomer, late to the party is analyst Susan Billat who has been quoted as stating "You're going to see this ripple through the supply chain," and "Times are tough, and the bad news is there's no visibility of improvement."
Well, that could be the reason why this commentator has not been a cheerleader in this sector for months but rather a selective stock picker for some decent positional trades.
The Asian economic crisis coupled with anxiety surrounding increased competition from Europe has possibly created a slump in the specialty chemicals sector. This has caused some of the stocks to be oversold. This might be a carryover from the negativity in the commodity chemical sector. If we are correct in this assumption, the commodity chemical slump may actually be good news for the specialty chemical sector since commodity chemicals are the basic raw materials for the specialty chemicals produced. Lower raw material cost usually translate to higher profit margins on the end products. With this said, there may be some good stock picks, given the depressed valuations of some of these stocks.
One of the stocks that I favor in this sector is Ecolabs(ECL) which develops cleaning, sanitizing, janitorial maintenance and pest elimination products and services. ECL has very little industrial exposure, making it stand apart from many others in its specialty chemical sector. ECL has good R7D and a strong customer oriented focus. This stock has not been beaten up too badly and trades at 29-3/16 which is above its 52 week low of approx. $22, an a good candidate to see the upper 30s, according to a PaineWebber analyst.
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Prosearch 5.0* Top Stock Report
08/26/98
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1> CYCH - CYBERCASH INC COM .INT
Price= 10.3 ( 37) AvgVl= 499.4 ( 96) 1-Dy = 112.5 ( 99)
2-Dy = 135.6 ( 99) 3-Dy = 127.8 ( 99) 4-Dy = 125.3 ( 99)
1-Wk = 114.9 ( 99) VL/30= 604.6 ( 99) 2/30 = 450.7 ( 98)
3/30 = 317.6 ( 97) 4/30 = 255.3 ( 96) 5/30 = 219.7 ( 95)
%Rnge= 74.0 ( 78) DRAvg= 57.0 ( 81) ConDy= 2.0 ( 97)
Exchg= 3.0 ( 51)
9> THDO - 3DO CO COM .DSO
Price= 3.9 ( 11) AvgVl= 354.8 ( 94) 1-Dy = 100.8 ( 93)
2-Dy = 104.1 ( 96) 3-Dy = 107.7 ( 98) 4-Dy = 104.1 ( 96)
1-Wk = 109.6 ( 98) VL/30= 100.3 ( 80) 2/30 = 121.6 ( 72)
3/30 = 101.5 ( 64) 4/30 = 93.2 ( 56) 5/30 = 89.4 ( 54)
%Rnge= 83.0 ( 82) DRAvg= 73.0 ( 95) ConDy= 3.0 ( 98)
Exchg= 3.0 ( 51)
15> AKLM - ACCLAIM ENTERTAINMENT INC COM .LTG
Price= 7.0 ( 20) AvgVl= 621.4 ( 97) 1-Dy = 102.7 ( 96)
2-Dy = 100.0 ( 78) 3-Dy = 100.9 ( 89) 4-Dy = 101.8 ( 94)
1-Wk = 99.1 ( 66) VL/30= 83.6 ( 75) 2/30 = 107.6 ( 65)
3/30 = 84.8 ( 52) 4/30 = 93.4 ( 57) 5/30 = 88.2 ( 53)
%Rnge= 100.0 ( 99) DRAvg= 56.0 ( 80) ConDy= 1.0 ( 92)
Exchg= 3.0 ( 51)
19> OAKT - OAK TECHNOLOGY INC COM .ESE
Price= 3.2 ( 9) AvgVl= 234.7 ( 92) 1-Dy = 100.9 ( 93)
2-Dy = 100.0 ( 78) 3-Dy = 99.0 ( 49) 4-Dy = 100.9 ( 92)
1-Wk = 99.0 ( 65) VL/30= 88.7 ( 77) 2/30 = 165.5 ( 84)
3/30 = 120.5 ( 74) 4/30 = 101.4 ( 63) 5/30 = 86.2 ( 51)
%Rnge= 69.0 ( 76) DRAvg= 47.0 ( 63) ConDy= 1.0 ( 92)
Exchg= 3.0 ( 51)
26> APCC - AMERICAN PWR CONVRSN CORP COM .ELE
Price= 33.5 ( 90) AvgVl= 709.6 ( 97) 1-Dy = 99.2 ( 56)
2-Dy = 101.3 ( 92) 3-Dy = 102.2 ( 93) 4-Dy = 98.5 ( 57)
1-Wk = 99.8 ( 70) VL/30= 75.6 ( 73) 2/30 = 122.3 ( 72)
3/30 = 111.0 ( 70) 4/30 = 109.4 ( 68) 5/30 = 102.3 ( 65)
%Rnge= 66.0 ( 74) DRAvg= 57.0 ( 81) ConDy= -1.0 ( 63)
Exchg= 3.0 ( 51)
28> SMTC - SEMTECH CORP COM .ESE
Price= 16.5 ( 68) AvgVl= 204.1 ( 91) 1-Dy = 100.0 ( 84)
2-Dy = 97.7 ( 31) 3-Dy = 100.7 ( 89) 4-Dy = 101.5 ( 93)
1-Wk = 101.9 ( 94) VL/30= 242.7 ( 95) 2/30 = 162.8 ( 84)
3/30 = 115.2 ( 72) 4/30 = 95.4 ( 58) 5/30 = 92.3 ( 56)
%Rnge= 78.0 ( 80) DRAvg= 64.0 ( 89) ConDy= 0.0 ( 78)
Exchg= 3.0 ( 51)
30> MPRS - MICROPROSE INC COM .DSO
Price= 5.8 ( 17) AvgVl= 223.2 ( 92) 1-Dy = 100.0 ( 84)
2-Dy = 100.5 ( 89) 3-Dy = 98.9 ( 48) 4-Dy = 98.9 ( 61)
1-Wk = 99.4 ( 68) VL/30= 35.2 ( 59) 2/30 = 93.9 ( 57)
3/30 = 108.9 ( 68) 4/30 = 95.9 ( 59) 5/30 = 89.5 ( 54)
%Rnge= 57.0 ( 69) DRAvg= 58.0 ( 82) ConDy= 0.0 ( 78)
Exchg= 3.0 ( 51)
39> WIND - WIND RIVER SYSTEMS INC COM .DSO
Price= 40.1 ( 93) AvgVl= 363.7 ( 94) 1-Dy = 98.6 ( 43)
2-Dy = 99.3 ( 53) 3-Dy = 104.5 ( 96) 4-Dy = 115.2 ( 99)
1-Wk = 110.3 ( 98) VL/30= 37.8 ( 60) 2/30 = 95.7 ( 58)
3/30 = 138.6 ( 81) 4/30 = 183.9 ( 91) 5/30 = 151.6 ( 87)
%Rnge= 93.0 ( 85) DRAvg= 57.0 ( 81) ConDy= -1.0 ( 63)
Exchg= 3.0 ( 51)
45> VTSS - VITESSE SEMICONDUCTR CORP COM .ESE
Price= 33.9 ( 90) AvgVl= 1110.9 ( 98) 1-Dy = 98.5 ( 42)
2-Dy = 102.2 ( 94) 3-Dy = 104.2 ( 96) 4-Dy = 97.5 ( 47)
1-Wk = 96.2 ( 41) VL/30= 76.6 ( 73) 2/30 = 84.2 ( 50)
3/30 = 96.9 ( 61) 4/30 = 106.5 ( 66) 5/30 = 97.1 ( 60)
%Rnge= 96.0 ( 85) DRAvg= 63.0 ( 89) ConDy= -1.0 ( 63)
Exchg= 3.0 ( 51)
47> NOVL - NOVELL INC COM .DSO
Price= 11.6 ( 48) AvgVl= 3517.9 ( 99) 1-Dy = 97.3 ( 23)
2-Dy = 101.6 ( 93) 3-Dy = 105.6 ( 97) 4-Dy = 106.8 ( 97)
1-Wk = 106.8 ( 97) VL/30= 90.2 ( 77) 2/30 = 159.7 ( 83)
3/30 = 150.7 ( 84) 4/30 = 160.5 ( 87) 5/30 = 158.8 ( 88)
%Rnge= 0.0 ( 25) DRAvg= 52.0 ( 73) ConDy= -1.0 ( 63)
Exchg= 3.0 ( 51)
49> SNPS - SYNOPSYS INC COM .DSO
Price= 31.6 ( 89) AvgVl= 748.8 ( 97) 1-Dy = 101.8 ( 95)
2-Dy = 99.8 ( 63) 3-Dy = 98.6 ( 44) 4-Dy = 101.2 ( 92)
1-Wk = 89.2 ( 11) VL/30= 42.1 ( 62) 2/30 = 104.3 ( 63)
3/30 = 137.6 ( 81) 4/30 = 166.1 ( 88) 5/30 = 205.3 ( 94)
%Rnge= 74.0 ( 78) DRAvg= 33.0 ( 32) ConDy= 1.0 ( 92)
Exchg= 3.0 ( 51)
53> CYBX - CYBERONICS INC COM .MED
Price= 6.6 ( 19) AvgVl= 473.8 ( 96) 1-Dy = 104.9 ( 98)
2-Dy = 100.9 ( 91) 3-Dy = 92.9 ( 11) 4-Dy = 89.8 ( 9)
1-Wk = 96.3 ( 42) VL/30= 110.2 ( 83) 2/30 = 119.6 ( 71)
3/30 = 130.6 ( 78) 4/30 = 151.4 ( 85) 5/30 = 213.8 ( 95)
%Rnge= 100.0 ( 99) DRAvg= 56.0 ( 80) ConDy= 1.0 ( 92)
Exchg= 3.0 ( 51)
62> MCRL - MICREL INC COM .ESE
Price= 36.1 ( 91) AvgVl= 236.0 ( 92) 1-Dy = 97.9 ( 32)
2-Dy = 99.3 ( 53) 3-Dy = 101.7 ( 92) 4-Dy = 103.2 ( 95)
1-Wk = 97.9 ( 55) VL/30= 121.8 ( 85) 2/30 = 114.2 ( 68)
3/30 = 109.2 ( 68) 4/30 = 95.4 ( 58) 5/30 = 100.9 ( 64)
%Rnge= 44.0 ( 57) DRAvg= 44.0 ( 56) ConDy= -1.0 ( 63)
Exchg= 3.0 ( 51)
63> LEVL - LEVEL ONE COMM INC COM .ECC
Price= 21.6 ( 79) AvgVl= 967.0 ( 98) 1-Dy = 99.7 ( 64)
2-Dy = 103.9 ( 96) 3-Dy = 102.6 ( 94) 4-Dy = 99.7 ( 68)
1-Wk = 95.8 ( 39) VL/30= 78.5 ( 74) 2/30 = 57.5 ( 31)
3/30 = 55.9 ( 28) 4/30 = 58.9 ( 27) 5/30 = 56.9 ( 24)
%Rnge= 84.0 ( 82) DRAvg= 47.0 ( 63) ConDy= -1.0 ( 63)
Exchg= 3.0 ( 51)
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