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Strategies & Market Trends : Picks of the quarter -- Ignore unavailable to you. Want to Upgrade?

To: Casaubon who wrote (2666)	2/13/2007 10:45:26 AM
From: Elroy	Read Replies (1) \| Respond to of 20435

The truth is that the company has a stable business Gross margins going from 40% (Jan '06) to 34% (Oct '06) in 9 months is not going to be considered a "stable" business. It's a business with declining profitability. So , the real story is a low of about $21 in Jan 06 to a high of about $33 in May 06 and back to low of about $15 in Oct 06. This all happened during the exact time frame you reference as evidence for "lock step" price action with GM. I'm not making this up, the movement you describe above is pretty much in lock step with gross margin changes when they reported their quarters. The gross margins decline from 40% to 36% (April '06) was reported in early June of '06. So a May high corresponds with the then most recently reported peak gross margin of 40% from the Jan '06 quarter (reported late Feb). As soon as evidence of gross margin decline came out (in early June) the shares begin their plunge. Anyway, don't take my word for it, for your sake however I would hope for gross margin appreciation if you want the stock to go up....