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Strategies & Market Trends : Steve's Channelling Thread -- Ignore unavailable to you. Want to Upgrade?

To: gancho who wrote (4005)	8/2/2000 11:25:12 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 30051

grancho, I suggested in a prior post that the holy one has become a very dangerous stock here. It must close above $17.5 or not make a new low under $13.5 in the next two weeks , IMTO, to get out of that situation. At the current price, the cap is close to $600 MM, for sales rate that are not expected within the next six months to be greater than $20 MM annually (right now, the sales rate is only $8 MM annually). That is a huge valuation for the "promise" to have capacity on line late in 2001 of $600/$700 MM annually (according to the CC). Going from $20 MM annual sales, to $700 MM annual sales is a huge effort, reqyuiring increase in working capital of probably some $200 MM, there is no way this will come from profits in the next 24 months. Since the stock has broken technically, just prior to earnings release and the CC (typically we would get a nice rise into earnings and CC), I believe that this down trend will continue and accelerate. Thus additional funding will have to be raised at lower capitalization (and further dilution). This analysis may be flawed, but I am certain the stock itself by its behavior will tell me that I am wrong, and if that is the case, I'll get back in. Right now, I am quite happy with my decision a fortnight back to sell just above $20. I still believe that under the best circumstances, they need an annual sales rate in excess of $75 MM to break even (and I believe these to be optimistic figures), I have no visibility of such a sales rate until a see a backlog deliverable within a year that is at least that large. Zeev