Ampex Corp: Digital Storage Message Board

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Technology Stocks : Ampex Corp: Digital Storage

AMPX 8.540

-2.0%

Dec 24 12:59 PM EST

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To: LJD who wrote (1998)	2/28/1997 4:34:00 PM
From: Hal Campbell	of 3256

Mark Robbins of Red Chip on CNBC ....didn't mention AXC unfortunately ...though he did mention an interesting little garment company with a 40% growth rate and a PE ( trailing?) of 10. Have been kinda loathe to mention this ....of course there is nothing magic about formulas and I continue to think investing is more an art than a science ....but my oft mentioned growth formula ..the one I use to ultra conservatively value incipient growth stocks ..which uses simple growth rates from manufacturing profits ( trailing only)..then establishes a trailing pe of 50% that rate - which at the beginning of last year I thought would value AXC at 10 to 12 ...depending on how much value you put on the royalties .. Ah well...due to the simple reason of federal budget constraints reducing instrumentation recorder sales (that could reverse fast), AXC only earned 16 cents per share in manufacturing in '96. Two cents less than I had been counting on. So, for what its worth - don't take it too seriously myself - the formula has AXC worth only around 7 to 9 bucks right now. The range determined by giving a pe of anything from 5 to 17 or so for the royalties. And giving a pe of 38 or so based on the 9 to 16 cents in manufacturing growth.( 79% growth). Now of course, a strict sales to capitalization ratio valuation would place AXC's value much lower...but in my very firm opinion that is not called for in this company.After the humongous downsizing its essentially a start up, not a mature storage company.Other, very widely used, growth formulas could actually be used to justify AXC at over 50 right now ...hey don't laugh - there are Major Houses giving strong buys to stocks that are already trading at over 50 times their best projected '98 earnings ( course I wouldn't buy one of those myself). As always, just one investor's view ...but the reason I am heavily in this stock ...VERY heavily after today ....is because it is just beginning to grow. An often turbulent but good time to own a company ...even with the natural tradeoff of surety for upside potential. Things may not work out exactly as Ampex has planned. There is risk ...but my oh my what potential. It may well go lower ...I don't know .. but if things work out at all over the next few years ..and positive corporate momentum rarely turns on a dime ... it really should go much higher somewhere down the line. Hanging on tight to this porcupine. PS...hope AXC is using the Car Guys' law firm of Dewey, Cheatum, And Howe

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