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

To: William T. Katz who wrote (10882)	12/9/1997 3:16:00 AM
From: Don Earl	Read Replies (2) \| Respond to of 12298

Hi Bill, You're comming up with about the same numbers I am. I figured .32 primary and about .35 one time charges after tax. I assume similar margins to Q4 for the first two months and am guessing they would pretty much shut down anything that isn't producing and concentrate on MR for the remainder of the quarter. Whatever increase in R&D will probably be off set by exchange advantages on Korean operations. Not good but not the end of the world. I think this possibility has been mostly figured into the current price. I doubt the downside is much more than a couple bucks before it starts to recover. Even if FY 98 earning only came to 1.25 and figuring a PE around 15 to be low, it's still worth $19 per share and is under valued at current levels. They will have their second MR fab up and running in another quarter and most of the yield and inventory problems should be cured by then. If this isn't the bottom, it must be pretty close to it. Regards, Don

To: William T. Katz who wrote (10882)	12/9/1997 6:54:00 AM
From: T Bowl	Respond to of 12298

Bill - Good work. But you're still probably too low for the GM estimates. Nice find on the 10Q. Go back to the Dec one and you'll see the same reference to volume and yields. Sankar had a good earlier post about fixed and variable costs. Those fixed costs haven't gone away. And their bread and butter(1 and 1.3GB heads) are being ramped down. The loss of the 1.7GB has hurt, but the acceleration away from the 1.3 will hurt worse in the long run. I expect NO earnings for the next 2Qs out of this(even before charges) Go back to the 20% reference to "as drive inventories are brought into line" Think about that one... It was due to the fact that WDC ended last Q with a large inventory of the 1GB and 1.3GB products(They had NO 2.1 products in inventory). And they expected to sell up to 7.5mil DDs this Q(1.5mil 2.1 DDs) That leaves 6mil of the 1 and 1.3 DDs. The newer estimates are around 6.5 total(don't know what the breakdown is now, but you can assume it's more than 1.5 for the tuscon) All of these extra heads had to be cleared. WDC has probably cleared those out now, so MarQ might be a bit better "as inventories come back in line" Beyond that APM is in even bigger trouble. This was the last Q for the 1GB head, You won't see the 1.3 after the MarQ IMO. They have NO products. Heck, even if they did the yields are ALWAYS lower on new products plus they are now being "rushed" into producing these. My guess is $0.00 to $0.50 for the FY(and that would be my high estimate). I'll go further and say that they could struggle to survive. Pretty doomsday huh? ALL THE OPINION OF A SHORT. todd