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

To: SeanS who wrote (11038)	12/16/1997 11:59:00 PM
From: Area51	Read Replies (1) \| Respond to of 12298

I don't know Sean. I'm loyal to a fault to the stocks I buy, but what is going to propel this stock up? There are too many good stocks with good earnings prospects, to tie up a lot of money here. You like disk drives: why not pay a few more dollars and get QNTM with 98/99 estimates of 2.04/2.67. Also look at SFAM for a good value, with good appreciation potential. I think I'll buy back my March 20 calls, and sell the july 12.5 calls to reduce my cost basis to 17. If it gets called at 12.5, I'll consider myself fortunate to have lost only 25% on this disaster. Happy Holidays everbody, Garry

To: SeanS who wrote (11038)	12/17/1997 3:52:00 AM
From: Don Earl	Respond to of 12298

Hi Sean, I found some of the loan info in the last 10Q. If you haven't read it and have some background in contract law, I'd be very interested in your analysis of the information. I can puzzle through that stuff but it's a little like translating a foreign language into english. I think these are key points: <6.1 Tenor : Minimum 30 days; Maximum 180 days.> <5. The total amount recoverable from us under this Guarantee shall be limited to the principal sum of Ringgit Malaysia TWENTY TWO MILLION ONLY ---------------- (RM 22,000,000-00---------) only or its equivalent in whatever currency denominated as shall be required by you at the date of payment with interest and commission thereon and all reasonable costs charges and expenses referred to in Clause 1 hereof.> ______________________________________________________________________ It also appears that part of the stated purpose of these loans is a hedge against currency fluctuations. It also looks like the loans are due this quarter. I think Crisman just pulled a 16 million dollar pure profit rabbit out of his hat that the Anals haven't even looked for. I was rereading the press release and noticed that the $8 million restructuring charge is described as "pre tax" and the $4.7 million in bad debt comes off Q4 97 revenue. Looking at 1996 quarters where sales were in the $80 million range, cost of sales was running around $60 million. For the Anals to be coming up with a 78 cent loss they would have to be calling cost of sales around $75 million. I don't know if that is realistic or not but it sounds high to me. On the bright side (.78) should be a lot easier to beat come January than .40. I agree that trying to estimate earnings is next to impossible. There is always information missing that leaves the bottom line open to pure guess work. There are 2 Anals covering APM -.72 and -.84 for Q1 98. That sounds like absolute worst case guessing. If they are able to keep cost of sales to around $60 million with the help of a strong dollar, gross profit would come to $20 million using $80 million for net sales. If they pull back on R&D to bring down operating expenses to around $14 million, that would leave $6 million net income from operations. Take off $6 million "after taxes" for restructuring, leaves $0 income. Add $16 million from the hedge fund and you end up with .66 EPS. I would consider that to be absolute best case guessing. Take your pick: 1. Stay long or buy at the 52 week low with the potential of short term paper losses, while waiting for a short squeeze of epic proportions. 2. Panic sell at a loss. 3. Stay or sell short, with the possibility of ending up bare foot come January. This isn't much fun right now, but like the man said, "The sun don't shine on the same dogs' ass all the time." Regards, Don