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Technology Stocks : Applied Micro Circuits Corp (AMCC) -- Ignore unavailable to you. Want to Upgrade?

To: SJS who wrote (697)	9/30/2000 4:47:17 PM
From: A.L. Reagan	Respond to of 1805

You're just about the first humble short I've met..... Comes from living through both the rise and fall of QCOM on the long side <g>. Also shorting takes a mindset that is difficult at times when one's overall portfolio is heavily on the long side of tech. But it can be an important element in lowering risk on an overall portfolio basis. Just as one wouldn't put one's long position into a single stock, one wouldn't just short a single stock either. Right now, relative to the overall NAZ, my risk judgement is that the downside to AMCC in the next 12 months is greater than the upside. In addition to the reasons outlined in prior posts, there are a slew of private opto-comm widgeteers with dreams of IPO $$ dancing in their heads. A bunch of these are premised on eliminating electron-photon conversions. Although I think the silicon-based transceiver, amplifier, switching, etc. components will be around for a long, long time, lots of room for the all-opto hypesters (they do it with mirrors, LOL) to proclaim that they will own the core of the network. Throw in a good standards debate, an earnings growth hiccup, etc., etc. and AMCC stock could quickly correct. (To some extent, suspect part of the attraction of MMC is its customer base serving the edge of the network, enterprise systems, MAN's, etc. which diversifies AMCC beyond the core where it may be LT vulnerable.) As far as being on the wrong side of a short, when you start at really robust levels such as this, it isn't any worse than being on the wrong side of a long (which has probably happened to each of us many times). The only shorts I've ever "arrogantly bashed" were INSP at $260 pre-split, and a POS BB outfit whose main business was stock hyping. AMCC is a well-managed company, with proven dependable products, established customer base, various product roadmaps to the future, good business model and execution, etc. But in addition to future technological threats, IMO AMCC lacks the pricing power, influence over future standards, and other barriers to competition implied in the current valuation, which at some point will adjust to a more normal level. And, to the extent the Navelliers of the world are holding 2MM plus shares on the futures of HDTV, we are quite a ways away from that tornado, and there will be buckets of component suppliers to that market. P.S. There is also a possibility that a fair number of the shares issued for MMC will trade straight away. This is only a possibility, not a probability, since there is no discernable arbitrage spread right now and the stocks are trading in lock-step and it is difficult to figure out the nature of MMCN's shareholders at this moment. An interesting post copying (including 7 replies) a lengthy new Business Week special report on the whole optics landscape can be found below. Nothing earthshaking, but a good review of the competitive and technologic landscape: Message 14483232