Some results from the AEA conference: Bad for ASND, good for CYMI:
Top Stories: AEA Attendees Find Themselves Jostling for Space
By Cory Johnson
Staff Reporter
11/4/97 4:38 PM ET
SAN DIEGO -- It's 6 a.m., but walking down the hallways of one of the many sold-out hotels here, you can hear televisions on in most every room, as the guests try to get the latest batch of overnight news. The restaurants are also packed, the 7-11s choked with long lines and parking is hard to come by. But we're not talking about the money managers who've come here to get the latest scoop on hot technology companies -- because the Brooks Brothers crowd is incidental to the overflow of surfers flocking to the San Diego area.
It seems a massive, El Nino-enhanced swell has rolled into Southern California just in time for the annual four-day American Electronics Association conference. So in the San Diego hotels -- as on the Internet -- CNBC takes a back seat to the Weather Channel as surfers look to see how long these bullish weather patterns will continue, and "Yo, dude" is a more common utterance than "EBITDA."
As it should be.
But for dedicated professional stock-pickers, the lures of Mother Ocean have taken a back seat to fiduciary concerns (though at least one analyst -- who asked to remain anonymous so he can keep his job -- ditched some of Monday's sessions to catch the day's last bit of waves). Big-time fund managers like Garrett Van Wagoner and analysts of similar stripe are gathered here for the AEA "Classic" -- a bitchin' conference that is actually as high-quality as this week's San Diego surf. The format is unique. More than 400 companies, represented by their CEOs, CFOs and other big kahunas, give 45-minute presentations every hour on the hour for a day and a half to an audience of about 1,300 analysts and money managers. Monday and half of Tuesday are companies with an over-$250 million market cap like Baan Co. (BAANF:Nasdaq) and SanDisk (SNDK:Nasdaq). Tuesday afternoon and Wednesday morning feature smaller companies ($100-$250 million) like Chips and Technologies (CHPS:Nasdaq) and Digital Lightwave (DIGL:Nasdaq). From there on even tinier companies like Premenos (PRMO:Nasdaq) and something called The Panda Project (PNDA:Nasdaq) fill out the show.
Unlike the Montgomery Growth Conference, this is not a momentum crowd and not a very talkative one either, because this is where story stocks attract their admirers. And fund managers like to keep these stories secret until they've bought in. Said one fund manager: "I did hear a really good story, but I can't really tell you about it until tomorrow, and you can't use my name." Great.
At least he could have said, "Hey dude, I did hear a really good story..."
There were some bad stories to be heard. An unusually glum Ascend (ASND:Nasdaq) CEO Mory Ejabat met with group of about 20 investors crowded into a meeting room as he admitted that important products like the MAX TNT remote modem with 56k add-ons were still not shipping in volume in Europe. He even had a sheepish and weird explanation for selling some of his own ASND stock: "You cannot have all of the eggs in one basket," he said. "Even Bob Dole needs to diversify now that he's retired."
One Merrill Lynch fund manager, who (big surprise) asked not to be named, got detailed answers to detailed questions and still left the meeting shaking his head. "Things are not good," he said. "Things are not good."
The talk of the first day's show, however, was good news from chip makers and chip equipment makers. Few of those presenting here said they would see much impact from the upheaval in Asian currency markets. "A lot of the chip business in Asia is in Taiwan, Korean and Japan," said ASM Lithography (ASMLF:Nasdaq) President and CEO Willem Maris. "And they've seen very little impact from this problem in Southeast Asia. Furthermore, the market for products from these companies is global; they will continue to see revenue and we will continue to sell to them. I don't know what will happen, but I can't imagine that companies like Hyundai and Samsung will stop selling products worldwide."
So the buzz on chip makers and chip equipment makers was all good. Particularly intriguing were the laser manufacturers, like Cymer (CYMI:Nasdaq), whose product is used in chip fabrication. "That," said a Dean Witter fund manager, "is the best story I've heard all day."
Indeed, one Oppenheimer analyst suggested that the Asian currency problems, coupled with steady international demand, could even result in lower labor costs for Asian chip customers, allowing them to buy more new fabrication capability.
The collapse of the Thai baht? The fearsome fury of El Nino? To those in the world of silicon, be they microchip makers or surfers on the beach, bad news from across the Pacific might be all good news in the end -- at least to those with the courage to paddle out into the break.
Or, in the words of Rich Flicker, 20, a surfer from Escondido, Calif.: "Bro, this is way big for San Diego, and long lefts like this, bro, are clean. El Nino ain't so bad, the sun is bitchin', the hotties are out in force. Tell your Wall Street dudes they should get out of their three-piece suits and into wetsuits if they want to see what's really up." <Picture>
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