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

To: Don Earl who wrote (11023)	12/15/1997 8:38:00 PM
From: SeanS	Read Replies (1) \| Respond to of 12298

Don, Are the loan instruments denominated in local currency or U.S. dollars? If APM borrowed the amounts in dollars, then no matter what the exchange rate, APMs' debt would not be affected. I have an idea about the reason that some of the technology stocks keep getting hammered. I know everone knows about the Asain troubles and the oversupply problems. But, people seem to be overlooking the huge amount of tax selling that is most likely going on. Let me put it this way. Normally if I am holding a stock that is down because of weak fundamentals going into Dec., I might be tempted to unload it for the tax writeoff. But, I might hesitate if I thought that it might rebound in the next month before I could buy it back and still take the loss. In the situation that we have now there is almost no risk of that because so many stocks in similar companies have been beaten down by approx. the same percentage. This removes alot of the risk of tax selling. If I sell and lock in the loss now and the sector starts to rally next week, I can still take my pick of companies that will rally about as much or more as the stock I unloaded. This way I can eat my cake and have it too. Does this hypothesis make sense or am I missing something? If I'm correct, we should see at least a modest tech rally once tax loss season winds down.

To: Don Earl who wrote (11023)	12/17/1997 2:52:00 AM
From: Frodo Baxter	Read Replies (1) \| Respond to of 12298

>Short term debt Q3 $50,182,000 Q4 $50,188,00 Malaysia Ringgit 6/30/97 $1 = 2.5237 12/14/97 $1 = 3.8075 If I'm reading this correctly they could service the debt for 33.7% less dollars than the amount borrowed, or an exchange rate profit, at current rates, of about 16.9 million (.68 EPS primary). < Look, I won't mince words. You're in way over you head with APM. All of this debt is denominated in ringgit. So, if they had 125 mln ringgit ($50 mln x 2.5RM/$) at 6/30, it would now have to be carried at $33 mln (RM125 mln / 3.8RM/$)... or a currency exchange loss of $17 (currencies are immediately marked to market because they are liquid). Debt service (in dollars) may be cheaper, but that's only because the asset they borrowed (in dollars) is worth less. This is BAD, not GOOD. Nice folk like Jon and Todd have been trying to tell you APM is yelping like a dog; it's time you take a second look.