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

To: T Bowl who wrote (11068)	12/18/1997 11:35:00 AM
From: Mark Adams	Read Replies (2) \| Respond to of 12298

I think your missing the RDRT charges which coincided with WDC's announcments and were 3 times the size of APM's. If you asked RDRT I'm sure they'd confirm that they did supply 1.3 TFI to WDC last qtr. You may make a dollar or two, but more likely due to the general downdrift of the entire market than company specific reasons in this case, IMO. There are better shorts available.

To: T Bowl who wrote (11068)	12/18/1997 3:13:00 PM
From: Don Earl	Read Replies (3) \| Respond to of 12298

Hi Todd, I follow your reasoning to a certain extent (I'm still playing catch up on the technical side of the industry). I don't discount what you are saying but I believe there are other economic issues involved that will have a large impact on the business. The currency exchange rate is the biggest. I don't know what percentage of APMs business is fixed costs directly related to manufacturing in Asia. Whatever it is, it has been reduced by 1/3. There is no doubt in my mind that it will affect margins. On the $8 million restructuring charge related to overseas operations, I'm making certain assumptions. Since the company has to cut back on production because of inventory problems in the channel, it makes sense to me that they will take the cuts in areas that are more expensive to operate, such as Ireland and China (no currency advantage to speak of). From what I've seen, restructuring is a nice word for firing everyone they don't need. This suggests to me that a larger percentage of production will be in areas where they can take advantage of lower costs because of currency advantages. I've posted in careful and boring detail my reasoning regarding paper profits of .66 EPS related to hedge funds in Malyasia. How much of that will be realized as income in this quarter is certainly open to debate, but the fact that it is there is beyond question as far as I'm concerned. Information available from APM suggests sales of $80 million for Q1 and $96 million for Q2. We all know how these kind of forward looking statements can turn around and bite an investor but those are the only numbers I have to work with for now. There are a lot of variables involved in trying to calculate EPS from projected income and past expenses. I've played with the numbers a lot, experimenting from best case to worst case and everything I could think of in between. The most probable outcome I can come up with is around .20 to .32 before one time charges and investment income. Restructuring should be around (.25). I sincerely doubt the company will take all the profit from the hedge fund. It seems probable to me that the minimum would be around .08 and the maximum around .25. As close as I can tell every prediction any analysist has made in the last few years concerning income 12 months out had been dead wrong to a degree I consider laughable. I know a lot of investors put a lot of faith in the opinions of analysists. I don't. At best I consider their opinions to be contrarian indicators. IMO (.78) is a blow out just waiting to happen. I have a hard time imagining a short player that would want to hold that position over night before earnings. If I see a stretched out U shaped pattern in the charts with low volume and low volitity, between now and mid January, I'll probably take money out of the bank and double my position. I agree 100% that the opinions of investors on threads where the stock trades in the neighborhood of 1 million shares a day, could hardly influence the price to any measurable degree. To a certain extent I'm almost starting to think the exercise may even be counter productive. After all why should a hand full of people on each thread spend hours of tedious research, only to give the results away for free. I believe you are one of the people that does his homework and I always read your posts with interest. I also think you will have profit sitting on the table before I do, but that doesn't mean I won't get mine. Good luck. Regards, Don