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Strategies & Market Trends : Roger's 1997 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Craig Richards who wrote (7642)	12/1/1997 10:51:00 AM
From: Bob Trocchi	Respond to of 9285

To All: In this weeks Barron's On-Line (paid subscription) there is an excellent review of the Condex show. Since it is a paid for service, I will not copy the article here. For those of you who subscribe to the WSJ on-line service or Barrons, the site is: interactive.wsj.com I did copy a snippets from the article about ViTECH which has been mentioned as a possible short on this thread several times. Do your own DD. ViTECH >>Over the summer, my fellow Barron's left-coaster Jaye Scholl did a revealing piece on a little Miami-based PC maker called Vitech America. Vitech makes and sells its wares exclusively in Brazil, and over the last few years has been racking up impressive growth. As Jaye pointed out, though, Vitech has a long history of legal entanglements, including a continuing dispute with IBM, and has the backing of an underwriter, H.J. Meyers, with a lengthy regulatory history. The stock initially slumped following Jaye's story, but then came roaring back. (Last week, the shares traded for about 16, roughly where they were before our story ran.) Now, Vitech has new reasons to worry. The big problem is that Brazil's economy is stumbling badly. Though President Fernando Henrique Cardoso last week said Brazil has no need for an IMF loan to bolster its sagging currency, there is nonetheless growing fear the country is headed for a recession. Brazilian interest rates are soaring, while the government plans to increase income taxes and cut public spending. In filings with the SEC, Vitech has projected annual growth in Brazilian PC sales of about 30%, but that now seems unlikely. According to Dataquest, Brazilian PC sales in the third quarter actually fell 4% from a year earlier. Meanwhile, the dynamics of the Brazilian PC market have been shifting against Vitech. Luis Anavitarte, a senior analyst at San Jose-based Dataquest, says sales of brands sold only in Brazil have been losing ground to multinationals like Compaq Computer, IBM, Hewlett-Packard and Acer, as the big boys cut prices to keep up with the locals. In the third quarter, for instance, sales of Compaq computers grew 75% in Brazil, despite the slight drop in overall demand. Compaq now has 16% of the Brazilian market, more than twice the No. 2 competitor, a Brazilian manufacturer called Itautec. Vitech has about 4% market share, ranking eighth. Pricing pressure comes at a bad time for Vitech -- the weakening local currency squeezes margins because PC makers pay for parts in dollars, not reals. Vitech, in short, is selling the wrong product in the wrong market at the wrong time.<< Also for ZITL shorts (me included) another insider registering to sell shares. Company symbol $ Value # shares # People/ Level Price When registered ZITEL ZITL 747,120 60,000 1 - D 12.45 Regards Bob T.