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Technology Stocks : MERIX, Volume and stock are showing some momentum
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To: rich evans who wrote (3)3/1/1997 6:11:00 PM
From: kolo55   of 20
 
I have a small position bought last Q earnings disappointment.

The board manufacturing companies are doing well, but this company is really lagging. Looks like their customer base is being attacked, and they aren't picking up new customers. They haven't brought in a significant new customer for awhile, and they just aren't going to grow without new customers. They were doing $47M in sales each quarter in early 96, and now they only did $36M last Q and project $36M this quarter. The earnings have disappeared so now the street seems to be valuing this company like a slow growth cyclical.

The bright spot that I see, is that they must have a lot of excess capacity, so if they just closed some sales in what increasingly looks like a hot market for boards, they could see a nice burst in earnings moving forward. If they just could get back to the $47M per quarter revenues, the earnings should exceed $1.80 per year versus the anemic $0.38 that was the consensus prior to the latest earnings warning (probably lower now). As long as the projected earnings keep dropping this stock isn't going to move up.

I bought a position in December at 15-16 after the last earnings disappointment, and sold half when the stock broke 20. If it drops back to 15, I will consider adding to my position.

Paul
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