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: EyeDrMike who wrote (10777)	12/8/1997 2:10:00 PM
From: Think4Yourself	Respond to of 12298

i think putting the money into RDRT would have been smarter move. I thought about that. After looking into RDRT's numbers, and comparing them to APM's, I decided against it. The main reasons are RDRT's low efficiency DD Price wars will hurt everyone, RDRT and APM I believe APM will have to announce either a charge, new stock BEING ISSUED, or a couple of really bad quarters. why do I make the last claim above? 1. SG&A, Interest Expense, Research, will not go down with the WDC news (actually some of them should go up with the need to obtain new business. Who will want TFI now? 2. APM was operating at a relatively low volume even before the news. Their recent 10Q's state that the bulk of their profit margin increases were due to manufacturing efficiencies caused by the higher volumes relative to prior quarters. With the loss of all the WDC work (44% I am told), what will happen to their efficiency gains? They will lose them or, worse, will stockpile outdated product. 3. The fast moving technology will make APM's TFI products even less valuable in a VERY short time. I am seeing weekly changes in the product mix on store shelves. APM is only at 5% MR now, and will only be to 75% MR by 3Q98 (I think). I think this is overly optimistic. Check their 10Q for their plant completion dates. Even if they can achieve 75% by then, WHO would possibly want the 25% TFI they would still be producing at that time? 6GB drives will be the lowest end of the market then IMO. APM management made a good business gamble on TFI. Unfortunately for them they miscalculated the technology life cycle. I have also seen something on the Yahoo thread of APM regarding certain institutions being able to force APM to buy back the stock they hold. Not sure what that is all about. Ken