Actually, amcc and qcom charts do not look anything alike. The action in amcc NOW is much like it was in April. There is an incredible amount of volatility, up and down as if the market can't figure out how it should be valued. The one difference is that now it has a big gap down (definately not a pretty site... TRADERS and MO MO's bailed out quickly). There was never this sustained magnified volatility in qcom at it's peak let alone at any time nor does it have a secondary high with the same amount of frenzied buying and selling as amcc has had. Qcom had a parabolic rise of 56% in one week. The day the stock peaked it closed near the low and never rose that high again. Within a week it had lost that gain. Even before that rise the chart can't be compared to amcc. Qcom was a 4 Bagger in 2 months (after it had already risen alot). Amcc has risen ALOT, but not to that extent in that short a time frame. So, no. You cannot compare the two charts and say that they look alike. Yahoo looks similar to Qcom, but not Amcc. Qcom didn't have a "classic double top". It did have a parabolic rise with a snap back rally and a lower secondary top. It's a "classic bubble chart". Amcc doesn't have a double top either. LOL! Semantics. But lets call it correctly, if we're trying to talk about the chart. (Didn't you notice the double top on NT? It's a little harder to see now, since it tried to make a rally above the neckline one day but failed. If you had paid attention, you should have been buying puts on NT as a hedge). I'm sure shorting amcc made up for NT, but ironically, it's NT that is bringing down Jdsu and Amcc. Ok by me. It did it in the summer and it was all nonsense then too. Wonderful opportunity to make a profit on other's fears. This time will likely be no different. Just like in the spring, Amcc appears to have traders confused on where it should be trading. DUH! MAYBE we've seen the top in amcc, maybe not. When earnings come out again, I'll bet the stock rises if the market is decent. You can then look back at the chart and say, "why didn't I buy?". Plenty of people thought csco, dell and msft had topped out over the last decade, but no, they just kept coming back, because they proved that they did have the biz in place to support another move up. (Ok, NOW we have a pc slowdown, but that doesn't mean that amcc is slowing down).
As far as comparing the parabolic move in amcc now and thinking that this must be the end since it was the top in qcom and rfmd... sorry. EVERYTHING went ballistic in 2000. In fact. There are charts that looked almost like rfmd. Totally parabolic in the spring of 2000, crash down, but they went on to recover and made new highs. So why didn't rfmd come back? Because the fundamentals did not support it. At the moment, there is alot of trash stories going around, alot of investors (traders) who don't know the technology who are dumping amcc and jdsu. When earnings come out again, I bet we hear another fabulous report and those that sold are going to realize the stories they read were full of inaccuracies. Of course analysts will probably say once again, "yeah, but THIS will be the last quarter that is good, next one is going to be the one that kills the company". Meanwhile, amcc isn't cheap. Traders don't seem to believe that there is even one sector that is seeing increasing growth.
I dunno. Maybe Josef Straus and David Rickey (and Bob Bailey) are all wrong. Since they are talking to their customer's customers and are just now getting biz from design wins quite a ways back with MORE design wins every quarter, I think that they DO know about the forcast for future biz. PC sales and wireless phones are somewhat cyclical in that customers put off buying waiting for the newer faster, sleeker models. Once you get a pc that is fast enough, is there a need to replace it? The bottleneck in speed is in the internet infrastructure. (oh, my! but that would benefit the net infrasture companies). Building out the net won't wait for a newer chip as they are tested and designed into future products. In the meantime, current chips are used. Since demand is greater than supply, supply gets used up as the next products are out.
I don't know about rfmd, but amcc (and jdsu) are prevented from selling more because they don't have the capacity. You don't just go to another company and buy a different chip. It's not really a commodity biz (like pc chips). That's where design wins come in. Not sure what the barrier to entry on rfmd is but on qcom it was supposed to be cdma which is why it rose so fast. Part of it's troubles have to do with foreign usage of that technology and foreign government subsidies (si?). That is unlikely to happen to amcc or jdsu.
There are some clecs that are going to go under or have trouble with financing. That's the way it always is in any biz. (Did Mickey D's go under because other fast food places couldn't make it? Or did Walmart or Home Depot struggle due to other retailers problems with financing? No, of course not. They likely put them under as they had the better service, product and were able to build it out as customers wanted. Those that couldn't, died.) The strongest will survive even as the weaker ones get killed off. They have to. It's their business! It is what they do! Helloooooo! If they don't keep building, they will not grow! They'll find the money to pay for it. Same old, same old. If one company doesn't buy from amcc/jdsu, others will and those will ultimately be the ones that benefit. The risk in jdsu and amcc lie more in their inability to get supplies themselves, production problems, or a lack of labor than a buildup of their own product (book to bill will tell you how backed up they are). They do not have just one customer. In fact NT is a declining proportion of jdsu and amcc sales. Only one way that they can see increasing sales as NT declines in percentages and that is that they are selling to OTHER companies.
I suppose an argument could be made that ultimately everyone is trying to vie for the same net buildout biz. To think it's anywhere near being done, is silly and it's NOT limited to the U.S. Alcatel was a big customer of jdsu. Surprise, surprise! European infrastructure is a year or two behind ours. I guess ALA isn't having any trouble ordering or paying their bill despite the declining euro, slowing european economies, weak summer seasonality (oh those long european vacations... must be nice!), and rumors of european capex financing trouble. Don't get me started on other areas of the world, biz is going to last for quite some time to come.
While handsets can get saturated (how many phones can you sell to every man, woman and child?) until new products come out (consumers are so fickle. Maybe they decide to buy someone elses phone due to the color, while yours sit in a warehouse!), net usage is on the upswing (consumers have no choice in what semiconductor or routers are used). As the net is built out, new uses will increase demand (streaming video, video conferencing, home networking, radio stations, napster, etc). On top of that, there are still tons of consumers that want but are unable to get broadband connections. They will (for now anyway) pay for broadband service even if they whine about paying for dial up. Sub fees aren't the only fees that telcos can squeeze out of their customers. They won't though if they don't offer the service. Someone will get those subscribers and that company is the one that will get the fees. Chicken or the egg? Without the chicken, they get no eggs... They must pay up for the chicken. Why else would AOL be so hot about getting broadband? It's the fees they will generate from those subscribers! Ironically, the net is one of the reasons that phone rates have declined as competition from email, instant messengers and even free phone calls via the pc have forced down the price. Not good news for Wcom and T! (Might this be a reason for their poor earnings? Better get some new services then).
Well... we haven't even scratched the surface of why the net is so important. It's not that the world must have stock chat boards, amazon.com, napster or ebay auctions. If that were the big deal, sorry, it can't grow like a weed and be supported financially by consumers. B2C isn't enough by itself (although video on demand and home networking may one day prove to be money makers from the consumer side). It's B2B that will be the big beneficiary. I have no data to back it up, but I'll bet that companies pay more for their internet connections than consumers (same as phones. Businesses eat it and consumers get free local calls). So, my "guess" is that businesses will once again be forced to subsidize the consumer's use of the net. So be it. They'll make out well anyway as it will increase their own productivity, sales and internal/external quick communications. Speaking of B2B, why are the companies dependent on net based biz guiding for increased earnings? Oh, I think it's because more businesses are coming on line. Hmmm... more chips and fiber, please. Customers can't stand to wait around for slow service and nowhere is that more important than on the net where another site is only a click away. Maybe B2B ceos are blind to their future contracts too.
Capex differences have already been addressed by TD. Even if total expenditures are down, it doesn't mean that amcc is going to be cut... in fact, amcc products could see INcreased spending at the expense of other types of capex. I would guess that this lack of comprehending the differences in capex expenditures will be looked back upon in a couple years similar to how we now look at semiconductors in 98... There IS a difference. Of course by then Cramer will tell us he knew it all along..... if The Street.bomb is still around. Somehow he manages to stay afloat and I bet he's not able to do a secondary. Hmmm... come to think of it. I think he's losing money. How is he going to be able to try and get new subs? Maybe the end is closer for him than he thinks. LOL!
Btw... don't you need FO for wireless net connections? If wireless picks up as you think it will (and I assume you think consumers will want net service on their phones as well), why will FO growth decline? How can wireless grow hugely if the infrastructure is not built out? And... consumers going to forget the net while they talk on cell phones and businesses going back to snail mail and requisitions in triplicate? I dunno. Take my phone, fine, take my net connection and you're dead meat (and no way I'm ever going back to analog even if I have to pay more for the cable service).
TA |
