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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis -- Ignore unavailable to you. Want to Upgrade?

To: drakes353 who wrote (924)	3/15/1998 1:48:00 AM
From: Ken Brown	Read Replies (1) \| Respond to of 2506

Hey, drakes, that's some great detective work. Thanks! My hope is that they won't release a statement Monday until AFTER the market opens. I luckily covered by short a few days before the big runnup - and was glad I did when I learned of someone buying 300k shares. Now I would LOVE to be short again. Ken PS - Of course, there's always the possibility that the 300k buyer has info that AFC will not be moving offshore, and thus EA won't be losing all that business.

To: drakes353 who wrote (924)	3/15/1998 8:41:00 AM
From: dumbmoney	Read Replies (1) \| Respond to of 2506

EA looks like an excellent short prospect with all the convertibles and warrents hanging out there, plus bank debt, and the very likely need to issue even more convertibles in the near future. The only thing keeping it from being a no-brainer is that apparently there are some foolish people with money who perceive EA as a turnaround story (new management and business plan, etc). Maybe I'll play safe and wait for Q1 results. Of course, by then it may be too late.

To: drakes353 who wrote (924)	3/16/1998 4:11:00 AM
From: Q.	Respond to of 2506

I'm trying to compare EA's latest results to analyst expectations. Here is the only analyst report that I have: NEW YORK--(BUSINESS WIRE)--Dec. 9, 1997--S&P analyst Mark Arbeter has initiated coverage of EA Industries with a 4 STAR, accumulate rating. Arbeter sees big potential from this underfollowed contract manufacturer. The company is in the midst of a dramatic turnaround, spearheaded by new CEO and president, Frank Brandenberg. EA has sold money-losing non-core assets, consolidated its operations, slashed management layers, cut factory expenses and strengthened its sales staff, all over the last 7 months. A completely new board of directors was brought in and consists of executives from Lockheed Martin, 3Com, Seagate Technology, and Xerox. Besides the potential for internal growth, the company plans to acquire highly profitable quickturn/prototype facilities geographically dispersed near EA's customers, which will add to '98 revenues and improve margins quite a bit. Arbeter sees a 22% sequential jump in 4th quarter sales and a Q4 loss of $0.06 a share vs. a 3rd quarter loss of $0.17. He is conservatively estimating '98 EPS at $0.23 on a 46% jump in sales. CONTACT: Standard & Poor's, New York Mark Arbeter, 212/208-8955 ======================================== My comment: As it turned out, the 4th quarter had a loss of $0.74, vs. Arbeter's estimate of a loss of $0.06. I'm not sure how these two numbers really compare, though, since I'm not clear on which quarter some of the charges were made. Some of the charges are not for operations, and shouldn't really be included in comparing to analyst estimates. In any case, Arbeter ought to scrap his 'conservative' projection of a profit in 1998. Here's what the Arthur Anderson had to say in the 10k: <<As discussed in Note 2 to the financial statements, the Company has incurred significant losses in each of the last three years, a significant portion of the Company's convertible notes and debentures are currently payable on demand, and, at December 31, 1997, the Company had negative working capital and a shareholders' deficit. In addition, the Company had negative cash flows from operations in each of the last three years. The Company's financial projections indicate that operating losses and negative cash flows will continue into 1998 and that the Company will be in violation of the covenant under its primary loan facility to maintain a required minimum net worth. These conditions, among others, raise substantial doubt about the Company's ability to continue as a going concern.>>