*AV* -- Four Stories and a short comment. IF ADPT opens at 27 or lower, I will jump on it for the long term and not for a trade. This stock will comeback and the after hours shennanigans may allow those quick on their feet (I hope) to get a good bargain. Keep in mind, I usually get to the party a little early. This time it is 1/3 now, 1/3 if it continues to drop further and the final 1/3 as it comes back through the original entry price.
MU: 2 days in a row of price increases and this stock is up from the low/mid 20s to almost 30. And I though DRAMs were the cause for all this mayhem prior to the Asian Crisis. Heck, there is an analyst now touting that this is the sign that the sector is about to turn around. Yeah, a sign like "I am following Stupid until I get make myself look just as ridiculous". A couple of days ago Lehman downgraded this stock and now I think a couple of minds are about to be changed.
Moral of the story: Fundamentals and some TA to find the right stocks then wait for the sanity to return to the market. Let's just face it, the guys on the Street (the every present 28 yr old money manager and fund manager) have ants in their pants and don't which way is up or down. Youth, inexperience and the desire to move funds and create volatility are the prime causes for this chaos.
Two opposing stories one great (or at least temporarily) and one pathetic. How will the market react???
Two scenarios
DRAM pricing is rising for the first time in 6 months. Rising prices mean rising profits, expansion, new facilities, and follow through to all the other aspects of the sector. This is what we were waiting for. A turn in the DRAM gloomy picture and all is well with the world. Let the good times roll. The Asian crisis will heal itself.
or
See, I told you so. The quarterly numbers are coming in and they are very pathetic. The sky is falling and the entire industry is going bankrupt and semiconductors are going the way of the buggy whip. Totally useless pieces of refined sand. Revenues and profits are off. Capital spending is going to be curtailed. Panic is going to hit the streets. But wait, it can't be all that bad. After all, where are you going to find a sector that is giving double digit returns and is growing every year. So what if earnings are down and not as good as last year. The PEs are some of the lowest in the market and earnings are good relative to other sectors. Technology moves on and this requires the purchase of more state of the art equipment. It might be slow in coming but it is nonetheless coming. This is a shoo in and there is very little risk that technology will, all of a sudden, stagnate and not progress. Alternate fuels or fuel cell/electric means of transportation could put the oil and gas industry in a bind down the road but we are decades away from something that will replace semiconductors. After all, these little ICs are getting into everything: your cars, you appliances, your homes, your forms of entertainment, your workplace, your personal and educational lifestyle, and even your body.
So both scenarios are really positive in the long run. For that reason and that reason alone, the BLOOD IS GOING TO RUN IN THE STREETS TOMORROW IN THIS SECTOR!!!! Why??? Because it won't make sense, which is the order of the day. The sector may be eviscerated tomorrow so the flaky 28yr old fund and money manager along with those who make a living making a market in these stocks can soak John Q Public for stock price, commissions, and spreads such that they can turn in some phenomenal numbers to their respective companies. After all, isn't that the nale of the game, making the Bottom Line look great so you can get those hefty bonuses locked in early this year???
Cynical and upset. OFF COURSE. Well, enough of this and enjoy the stories. Patrick, pass the Arsenic Cocktails.
Andrew
Thursday January 8, 5:43 pm Eastern Time
AFTER THE BELL - Adaptec shares dive
NEW YORK, Jan 8 (Reuters) - Shares in Adaptec Inc spiraled downward more than eight points in after-hours trading Thursday before the stock was held, dealers said.
The company's stock price dove after the company warned that its third quarter earnings results would come in well below Wall Street expectations.
Dealers said the company's stock traded at 27-1/4 before being halted to trade, off an unofficial close of 35-15/16.
While First Call analysts' consensus figures had put the company's quarterly earnings at $0.56 per share, Adaptec forecast a range of $0.35 to $0.40 per share for the quarter.
Adaptec, which makes computer subsystems, software and chips, suffered another blow in December when its shares fell more than 10 points, or 22 percent, in three days.
That drop was attributed to fears that the company would be hit by a slowdown in the disk-drive industry.
Later, dealers said the halt was lifted in Adaptec stock, and that it slipped slightly further.
''Adaptec is really the only name (trading out of line with its closing value) and it's trading at 26-1/2 now,'' a dealer said.
Other companies releasing news after the bell did not see significant price swings in their stock prices, dealers said.
Also making news, AT&T Corp (NYSE:T - news) waited until late in the day to announce it would buy Teleport Communications Group Inc (Nasdaq:TCGI - news) in an all-stock deal valued at $11.3 billion.
Dealers said the long-distance phone company's stock did not trade and that Teleport stock moved down slightly to 54-1/16, off an unofficial 54-1/8 close. The exchange carrier's stock had fallen more than three points during regular-hours trading.
Thursday January 8, 5:08 pm Eastern Time
Adaptec Estimates FY 98 3Q Results
ADAPTEC INC. Estimates Third Quarter Results
Jan. 8, 1998, Adaptec Inc. (Nasdaq:ADPT - news) said it expects to report earnings of about $0.35 to $0.40 per share, before charges, on revenues of $250,000,000 to $255,000,000 for the fiscal 1998 third quarter ended December 31.
Including certain one-time charges and a change in accounting principles, ADPT expects to report net income of $26,000,000 to $28,000,000 and earnings per share of $0.21 to $0.23.
ADPT reported earnings of $0.36 per share, including charges totaling $0.16, on revenues of $251,703,000 for the fiscal 1997 third quarter.
Thursday January 8, 4:00 pm Eastern Time
Company Press Release
Adaptec Announces Preliminary Third Quarter Results
MILPITAS, Calif.--(BUSINESS WIRE)--Jan. 8, 1998--Adaptec, Inc. today announced that, based on a preliminary analysis of its results of operations, it expects to report revenues for the third quarter ended December 31, 1997 in the range of $250 million to $255 million.
At this revenue level, earnings per share are anticipated to be approximately $0.35 - $0.40. In addition, the company anticipates certain one-time charges and a change in accounting principles required by the FASB. Reflecting these adjustments, the company expects to report net income for the third quarter ended December 31, 1997 in the range of $26 million to $28 million, and earnings per share of $0.21 to $0.23.
These statements regarding estimated results are preliminary and based on partial information and management assumptions. The company expects to announce its actual results for the third quarter ended December 31, 1997 on January 20, 1998.
The information in this release regarding expected revenues and net income is forward looking and preliminary. Actual final results for the quarter could differ, depending on a number of factors, including the roll-up of actual financial data from the company's various business units. For a more detailed discussion of factors that affect the company's operating results, interested parties should review the company's SEC reports, including Adaptec's Annual Report on Form 10-K for the fiscal year ended March 31, 1997, and Quarterly Reports on Form 10-Q for the quarters ended June 30 and September 30, 1997.
About Adaptec
Adaptec provides bandwidth management technologies for organizations building the global information infrastructure. Its high performance I/O, connectivity, and network products are incorporated into the systems and products of major computer and peripheral manufacturers.
Founded in 1981 and headquartered in Milpitas, Adaptec (NASDAQ:ADPT - news) employs 3,500 people worldwide in design, manufacturing, sales, service and distribution. Adaptec's home page is adaptec.com .
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Thursday January 8, 5:48 pm Eastern Time
Micron shares gain, DRAM prices seen higher
NEW YORK, Jan 8 (Reuters) - Shares of memory chip maker Micron Technology Inc jumped on Thursday on higher spot prices of computer memory chips and on rumors of chip production constraints in South Korea that could curb supply.
''Prices for 16 megabit chips in certain configurations have gone up 25 to 30 percent in the past two days,'' said Michael Gumport, an analyst at Lehman Brothers. ''There are rumors Korean companies are having trouble paying for packaging and that is causing delays in shipments. Whether or not this is true, the fact is DRAM prices have gone up.''
Shares of Micron rose two to 28-3/8.
''We have seen a little bit of an uptick in the spot market in the last day or so and I believe that is the reason Micron has moved up,'' said Mark Edelstone, a Morgan Stanley analyst.
There are also rumors that South Korean companies, which produce about 35 percent of the world's dynamic random access memory (DRAM) chips are unable to get the credit necessary to buy epoxy resin used to make the chips, traders said. This would reduce the supply of chips on the market and drive prices higher, they said.
Analysts said spot prices were rising, although they were unsure if the increases could be sustained.
''If it is just a packaging issue. It will resolve itself...,'' Gumport said. |
