Harmonic Lightwaves (HLIT) Message Board

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Technology Stocks : Harmonic Lightwaves (HLIT)

HLIT 9.690

+1.1%

Dec 5 9:30 AM EST

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To: Hiram Walker who wrote (2495)	9/8/1998 10:18:00 PM
From: ahhaha	Read Replies (3) of 4134

If there is a substantial increase in orders for the company's products, initially costs will rise faster than revenues and margins will be squeezed. Currently the company sports high marginal costs. It would take an extended period of high level of sales before the marginal costs would abate and scale would releverage margins. The extended period would be at least 3 quarters. The growth would have to be steady without excess acceleration because rising increments of sales accelerate costs. So the company needs good growth, not accelerating demand. What is happening is very weak sales. The stock has busted through a major bottom and shows no rally potential. The consolidation structure is textbook short sale opportunity. Every trade analysis shows aggressive intent to get out of this stock and there is little short covering. The phase is similar to what happened 1 year ago. Once the rally in the generals is over, they'll start dumping underperformers and institutions will dump HLIT. The current price structure suggests a downside target of 4. Upside potential looks like 10 1/8.

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