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

To: SJS who wrote (828)	10/27/2000 4:23:00 AM
From: Trader Dave	Read Replies (2) \| Respond to of 1805

Valuation, Growth and CAPEX: what's the deal? Geez, out of the office for 36 hours and...... Before anyone does anything here, could we PLEASE not make any decisions based on the "thinking" of Jim Cramer? JDSU the next Komag! I'm framing that one! I do not have enough time or resource to explain how frighteningly lacking in intelligence he is in his "thinking" about the technology sector. All I'd ask is you look at his long term returns and rate of portfolio turnover. He is a fast money trader, nothing more. I do think the fear and volatility are completely understandable. I believe we are at a point in history where there is the convergence of a number of unprecedented parameters: - Valuation levels - Growth rates - Lack of Wall Street understanding....ESPECIALLY the "professional" portfolio managers making the minute to minute buy/sell decisions. - Differences in market segments - even differences in business drivers among different customers in what APPEAR to be the same segment. (Are CSCO, LU, NT and JNPR really in the same business? How many businesses are they actually in?) I don't have the time to go into all of my analysis about all of the above, but I want to share some bullet points with the board since I respect the approach that so many posters take (positive and negative) on this thread. I feel that both sides have tremendous merit. 1) Valuation and Growth Amcc is still damned expensive ... or AMCC is attractive long term. Determining which requires looking at potential and expected growth rates in 2002 and beyond. There are so many if then variables with growth even over the next 24 months that the volatility is understandable. What if AMCC grows at 80% to 100% (or more?) for 3 to 5 years? Is that possible? What about growth of over 100% short term and 30% long term? AMCC could be reasonable or a short in that scenario. But if growth is to slow to around 30% beyond 2002, AMCC probably doesn't present a great risk reward opportunity. 2)Cap Ex What's happening with the confusion surrounding Cap Ex is one of the purest examples of where basic wall street understanding of critical industry factors falls woefully short of what's needed to make sound investment decisions. This is where I suggest the true investors on this thread go to any friends in the industry and do some work while tuning out the dribble that comes from the street folks. A few thoughts: By itself, telecommunications Cap Ex could not be more MEANINGLESS!!!!! BREAK IT DOWN BABY!! First, find out about total circuit switch cap ex. What % of total spending is it? Voice is a maturing business. Circuit infrastructure is a DEAD business. Note that LU and NT still have a substantial portion of business that is circuit oriented. Second, find out about packet cap ex. Keep in mind that is only a beginning. Even within packet cap ex, there is a lot of "legacy" spending irrelevant to analysis of the market opportunities we truly care about. Third, dissect "poles and holes" from provisioning. It is a lot more expensive to throw fiber in the ground than it is to light it up. We generally ONLY care about provisioning. The real issue with cap ex (long term) is to figure out how much packet bandwidth there is today and calculate how much we'll need over the next 10 to 15 years. How much pipe will be needed to handle all of the next generation internet applications and the convergence of every other information industry (voice, imaging, audio, video, publishing) onto a packet transport? I don't know about the chart similarities to QCOM, RFMD or other wireless plays, but there are tremendous differences between wireless voice equipment (for now a new transport for essentially a frighteningly commodity like business) and packet backbone and edge transport. (Wireless data is another story, but not worth discussing here.) There are so many other factors to consider. The merchant semiconductor cycle is very important. It provides a joyous multiplier on the underlying growth rates of the packet transport markets. That multiplier probably has a nice pleasant 2 to 5 year life. This confusion creates lots of opportunity. It certainly seems like the volatility will continue. TD

To: SJS who wrote (828)	10/27/2000 11:13:36 AM
From: SJS	Read Replies (1) \| Respond to of 1805

Merrill Lynch's Tom ASTLE this morning, made some comments on JDSU: ".....JDSU does not seem, at the moment, to be affected by any inventory build. Sequential growth does begin to slow from now on so I remain somewhat cautious. MY FEAR IS THAT JDSU IS A LAGGING INDICATOR FOR OPTICS DEMAND - I HOPE THAT IT DOESNT HIT A NORTEL LIKE AIRPOCKET NEXT QUARTER. * However, this may be too pessimistic if we look at the bullish forecasts for Q4 and the potential future revenue ramp up from the metro market - Remember that the metro market was one of the brightspots for Nortel in their now infamous quarter."