Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: SJS who wrote (817)	10/26/2000 9:25:27 PM
From: Raymond Duray	Respond to of 1805

Rick, Steve and thread, I'm largely in concurrence with the viewpoints of the last two posts. I've put together a few words over on the JDSU thread and think that they bear on the longs here. Message 14670976 Basically, what I'd advise all longs here to do is to upstream on the JDSU thread and read the comments of Greg Jones of Briefing.com. His views are not those of the pollyannas of that thread. They are however, the views that matter. JDSU's stellar quarter is history. The guidance for 2001 is window dressing and the real story is the WCOM and corporate bond market story. I plan to get what I can out of AMCC tomorrow and take a vacation. I don't see the point of being long the telecom equipment sector while the smart money is deciding the game is over. Sorry if this sounds grim, but I believe we've really come to the tipping point in the mania for infrastructure stocks. Best to all, Ray

To: SJS who wrote (817)	10/26/2000 9:57:15 PM
From: A.L. Reagan	Read Replies (3) \| Respond to of 1805

There are only some many companies than can be buying, integrating, and selling this optical stuff. And only so many that are going to use it. 1. New companies are being born regularly. Admittedly, few are attempting to break into the systems integration business. 2. The telco end users appear, in fact, to be diminishing in numbers; and they are certainly diminishing in purchasing power. Good question you raise then: where the hell is all this stuff ending up? According to NT, in warehouses! No laughing matter when there's an inventory build going on. Big guys hoard components in excess of current needs, which creates a mad scramble for the remainder from the little guys. Component prices are great, manufacturers are working overtime, and everybody thinks all is just ducky. Then the NT's of the world look at their stockpile and quit ordering for a while. Whereupon the component reps try to load up the smaller guys, who, after a while, get wise to what's really going on. And that's when the hiccup hits at the component level of the supply chain. If you really parse NT's CC, consider: 1. Some of the telecoms have pushed back installation timing. The field engineering shortage is on that end as well. 2. Norty probably (a) both hoarded components when there were shortages; and (b) were caught off guard by the slowdown from the telecos, who had various subsystems in their warehouses. The thing about big optical systems is that the end-users typically don't have to pay a lot of the bill until the system is installed and tested. So there's probably a fair amount of constipation with everybody's current backlog, as well as some future declines in capex. BTW, since I'm a temporary long here (Nov. calls for a quicky, I hope), so glad to see the snap-back rally... but Rick's (Diamond H's) admonition is spot on; and in fact the QCOM experience is what led me to identify this as a short candidate in the first place, with the persistent topping behavior in the 210's and the fact that AMCC was vulnerable to a major haircut with FUD at least partially grounded in the fundamentals. The QCOM chart is interesting. In early January, we had a fast crash (similar to this week in AMCC) that took her from $200 to $105, with a snapback to the upper $150's (which made all us longs feel invincible again), then an erosion bouncing around the $125 level (we all knew it would come back - didn't it just rally from $105 to $155?), and it did, back to the high 150's. Turned out to the a classic double top. Then the sh*t really hit the fan to that overdone low of $51.50. Very expensive lesson to guys like Rick and me. We paid dearly, but we understand a whole lot more about "double tops" than before. And, at least short-term, AMCC formed a double top at around the $215 level. If history repeats itself, I'm trying to play "snapback" rally #2 (to say $165-$180 here), and then I'm gone, or maybe short again if we cross $200 but stall below the old highs, assuming no changes in the fundamentals. Too bad SI charting doesn't permit comparative overlays in different time periods. But look at the AMCC for the last 8-9 months and then look at QCOM from April '99 to April '00. (This AMCC week lines up with early Jan. in QCOM). Then look at the rest of QCOM. Pretty spooky, huh?