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Strategies & Market Trends : Roger's 1997 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Roger A. Babb who wrote (8430)	12/15/1997 8:56:00 PM
From: IKM	Read Replies (1) \| Respond to of 9285

Anybody got an opinion on QCOM as a further short? It's always had a bumpy ride, and sold off in a big way last week. It's been in the low forties a couple times during the past year, and now is sitting at 50 7/8 after cresting at around 70. The troubles in Korea have been blamed for the sell-off, but they are now facing real competition for the CDMA handset business for the first time. Margins and share are set to drop precipitously, and pricing pressure for network usage is likely to limit growth much more than analysts predict. Their manufacturing business has never been in the black, and although dual-mode phones are likely to be a hit, the days of CDMA monopoly are gone. The company has gotten $100 million/quarter from royalties from other manufacturers, but now the Korean market growth is likely to stall no matter what happens going forward, so although it will be a source of cheap phones and dollar royalties from their export market, the total income from there will be a lot less. Also, the build-out of domestic CDMA markets is slowing dramatically, which means the infrastructure market and royalties will contract. They've taken equity stakes in several overseas wireless franchises, providing financing as well. With economic growth contracting in developing markets, those business plans are not as rosy either. Can this one be ridden down further?

To: Roger A. Babb who wrote (8430)	12/16/1997 12:33:00 AM
From: Eric Klein	Read Replies (3) \| Respond to of 9285

Roger, I'm back shorting DELL. It made a good move down today. The valuation is just too high, they're facing a lot of competition with many competitors copying their sales and distribution models. With so many unraveling momentum stocks in this market, I think it's a mistake to put too much in any one. My current shorts are: aol, acns, avnt, cnc, copy, ddim, dell, nscp, pega, pixr, yhoo, zitl Was in-and-out of ctxs for a good gain, but I think I closed out too soon on that one. It looks like it's going down a lot further. On another subject: PEGA - Pegasystems "PEGA develops, markets, and supports its customer service management software that automates customer inter-actions across transaction-intensive enterprises." What originally caught my eye was the high Price-to-Sales ratio = 14.72, P/E = 200, coupled with declining price. But now it looks like there are some real questions about the validity of their revenues. Apparently they engaged in a fishy transaction where "PEGA bought code back from FDC (First Data Resources), and then FDC bought software from PEGA over time - very, very fishy." They then had a problem getting the auditor to sign off on their books. biz.yahoo.com When they did get the 3rd quarter report out, it showed declining revenues. sec.yahoo.com Any company selling for 15 times sales better be clean as a whistle. High P/S combined with poor Relative Strength added to Accounting Shenanigans = disaster. Do you (or anyone else on the thread) have an opinion on this company?

To: Roger A. Babb who wrote (8430)	12/16/1997 5:50:00 AM
From: Rubber Man	Respond to of 9285

Hi! Don't usually post here, but got a pick I want an opinion for- VIFL. -6.8 M outstanding, 2.4 M float -Stock jumped on FDA approval of irradiation treatment of meat -going for niche market; i.e. planning to do second-tier irradiation as the major meat packers are probably planning their own facilitie -Was mentioned on Motley regarding the "dangers" of shorting- when it jumped to over 11 -Seven employees (from March 10-Q I think) -energetic and optimistic CEO -potential conversion of 3.3M debt to 0.80/share (don't recall what type of share, but it looks like commons from the 10KSB) -Jan 4 (98): 3.3 M debt becomes convertible into 4.2 M shares -March 31 (97): 6.7 M shares held by insiders. -Dec 15 (97): 6.8 M shares outstanding, 2.4 M float That majority of the float seemed be provided by MDS, which would mean they may decide to sell the 4.2 M shares after Jan 4 for a very nice profit. Even without dilution (4.2 M already included in 6.8) a sell signal from MDS could easily knock the price down a few points. To really speculate- MDS could short this and use the 0.80/share conversion to cover. Either way this stock may suffer within the month.