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

To: Think4Yourself who wrote (10822)	12/8/1997 5:33:00 PM
From: Chih-Lun You	Respond to of 12298

So you mean that the company is giving out a possibly intentionally false and optimistic press release about the current condition. Thank you. Not confused :-)

To: Think4Yourself who wrote (10822)	12/8/1997 6:18:00 PM
From: Jonathan Bird	Read Replies (2) \| Respond to of 12298

my (personal) opinion is that APM is doing a CYA (Cover your...) I couldn't agree more. As you know I was very pessimistic that we would even hear from APM till earnings. Stuff must be going really wrong to compel Crimsan to make this release. Some things I find interesting... Applied Magnetics announced that it has been notified by its largest customer of significant changes affecting its order backlog. "Backlog" implies orders that were scheduled for the future, but which are no longer scheduled. As I recall, APM used to have a backlog of like 6-9 months. But changes in future orders won't effect revenue in the present. A revenue reduction for this Qtr emplies MORE then just a decreased backlog. It implies NO backlog and in fact some manufacturing capacity sitting idle, or at least some product lying around that no one is buying. As a result, the company anticipates that revenue will be down more than 30% in the current quarter (FQ 1/98) This doesn't say it will be down 30%. It says MORE then 30%. However, it is anticipated that revenue will rebound in FQ 2/98 up to 20% as compared with FQ 1/98 as drive inventories are brought into line. Again, this doesn't imply that revenues will reboud 20%. It implies UP TO 20%. Unit pricing for recording heads for both the first and second fiscal quarters has decreased more than normal, reflecting the downturn in demand. This we suspected. But the silly thing is that APM is actually expecting a "rebound" for its outdated product! There acting like this is just a temporary problem because WDC is scalling back production. But they are not recognizing the fundemental movement away from the technology they sell. As a result of these actions, the company plans to take a one-time pre-tax restructuring charge of approximately $8 million in FQ 1/98 primarily in connection with a planned realignment of offshore operations. A "planned realignment"? If this is planned then why take a one time charge? I know I am nitpicking this release. My only intention is to point out that there is a slot of slop built in to it. There is plenty of room here for more ugly stuff. Jon Bird