Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : APSG - Applied Signal -- Ignore unavailable to you. Want to Upgrade?

To: Robert K. Schott who wrote (635)	12/19/1997 1:19:00 PM
From: Gregory DeMoully	Respond to of 884

RKS, I agree with you completely regarding the fact that even though APSG has been somewhat constrained regarding staffing they have managed to continue to produce fantastic earnings growth. From what I can determine, this is primarily a software company. The "reusable software components" they are developing today will continue to generate revenues in the future along with additional revenues from new development activites. The PE at which this stock trades is absurdly low compared to other software companies that have the same growth rate. This is the only pure play in the high growth area of "signal reconnasiance" systems. I am not aware of any serious competition to APSG. Do you know of any? This is exactly the kind of "niche" stock that can dominate a market. It amazes me that people would be willing to give away their stock at these fire sale prices. What is the problem? Greg

To: Robert K. Schott who wrote (635)	12/19/1997 3:50:00 PM
From: lkj	Read Replies (1) \| Respond to of 884

Hi Robert, While I agree with most of your analysis, I disagree with your result for APSG being the safest company. AST renegotiate profit margin with the government every spring. While the last negotiation was very favorable to AST, the next one would not. There is no doubt in my mind that the government thought AST charged (made) too much money this year. The profit margin for all of existing product would definitely be negotiated to a lower price. The only way for AST to continue this year's profit margin is to push out new products and charge the government based on the cost of engineering build instead of operations build. As almost always, engineering build is a lot more expensive than operations build. When a new product gets shifted from engineering to operations (while still priced as engineering build), there is a lot more money to be made. Being an engineer at The Sillicon Valley myself, I don't think the high demand for engineers are easing. As the latest EE Times predicts, 1998's new EE/CE/CS grads would make 6.5% more than the 1997 grads. And AST is not the only defense contractor making big bucks. Locheed is giving $10,000 to $15,000 signing bonus for software engineers. And I know someone whom has recently gotten a $35,000 signing bonus from Cisco. A simple barometer for the labor market is the housing and renting price in Santa Clara County. This year's rise was 12%, next year is predicted to be 10%. It's HARD to find people right now! Best Regards, Khan