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Technology Stocks : American Xtal Technology, Inc. (AXTI) -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (248)	10/28/2002 8:54:06 PM
From: The Ox	Read Replies (1) \| Respond to of 290

I would not say that AXTI's mgmt was overly optimistic on the conference call. It sounded more like a company having to take their medicine as opposed to someone pounding the table on what great prospects they have. They definitely sound confident that they will be able to weather the storm, however they are trying to baton down all the hatches. My opinion is that this company, like so many in the space never counted on the market drying up like it did. They all had grandiose plans that had to be shelved or discarded. Competition is making things difficult for everyone as the weak players just try to survive and the stronger players wait for their end markets to return. AXTI looks like a survivor on paper but they look to be in the camp that has a nice long wait. Looking at their cash burn rate and the expected losses which will reduce their tangible book value and assuming that pricing pressure will continue to make their lives difficult, I would say that there's still value in the company at the current price. Having said this, I'm not sure the equity market is going to be jumping on the bandwagon while revenues continue to be flat to down. If, or when, they can regain the Agilent business, if they can also sow some seeds elsewhere, they are probably going to make those who buy now happy somewhere down the road. I think the book value stated by the Yahoo post, at $4.40/share is still a bit high and by the time 2003 is over I expect it to be closer to $2.50 or $3/share. If they are able to ramp up customers and breakeven on an operating basis without doing too much damage to their book value, then this one could be a grandslam from here for those with plenty of patience. If you are counting on these things happening swiftly, there could be major disappointments ahead. One of the problems, as I see it, is that there are plenty of companies like this to choose from and I don't see AXTI attracting a lot of attention before they find out where they stand with Agilent. Even if they bag Agilent, we don't have any real clear indication of what this will mean to their revenue stream, so it's still a crap shoot.