Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Applied Magnetics Corp -- Ignore unavailable to you. Want to Upgrade?

To: T Bowl who wrote (10575)	12/4/1997 4:25:00 PM
From: Don Earl	Respond to of 12298

Hi Todd, What I'm looking at on WDC on earnings being cut from 1.40 to .30 for FY 98. 1. Outstanding shares increased by 17% last Q which will dilute earnings per share going forward. 2. .85-.95 charge against earnings. 1.40 - .23 (1.40 X 17%) -.85 = .32 I still see this as WDC specific rather than industry specific. Growth for PCs and the component parts used in home and office remains high. While low unemployment seems to bother Wall Street, people with jobs can afford to buy computers. Interest rates are low, so people with jobs can afford to buy computers on credit. APM is in a position to take advantage of favorable exchange rates for their operations in Korea. APMs sales have remained consistant. Wheither it's increase production to improve sales, or reduce production to increase margin, it seems to me that they are well positioned to take full advantage of a growth market. The short interest in APM strikes me as being dramatically beyond anything that could be considered reasonable. The increased risk factor associated with short play makes a long term position too dangerous for most investors. While APM has traded below book value in the past the fundamentals were considerably less favorable than the current numbers. IMO the downside surprise possibility was factored out by reducing estimates by .26 from last quarters actual results. From what I can tell APMs ability to produce MR heads greatly exceeds production levels of the last few quarters and current demand for those products is much higher than it has been. While future demand for TFI is certain to decrease, I see no indication that sales of those product has slowed down at present. A long position can be played a lot of different ways. Weither it's taking short term profits along the way or looking at fundamental information and price, and asking what is the possibility that even if it does drop further, what is the probability that it will not again reach these levels in the next 6 months to a year. On the other hand a short player can be forced to cover at an unfavorable price if the trade goes against him. I may be wrong on this one, but I'm not unsure. Good luck. Regards, Don