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Technology Stocks : DSC Communications -- Ignore unavailable to you. Want to Upgrade?

To: Doug who wrote (4300)	6/5/1998 11:40:00 AM
From: Ernie Kelley	Read Replies (1) \| Respond to of 4429

A short history of DIGI fnews.yahoo.com Wrong! Tactics and Strategies: Cramer Recounts His Days with DIGI By James J. Cramer Good riddance, DIGI! If there was a stock that personified the more manic years of Cramer Berkowitz, it was DSC Communications (Nasdaq:DIGI- news) , the company that got hit with an Alactel (NYSE:ALA - news) ADR) bid this morning. There was a time when DIGI ruled here. We caught the great '94 turnaround ramp in this stock. No, we did not own it at six, when Merrill's Joe Bellace first brought it to our attention as a fiber-to-the-curb play. Nor did we own it in the early 80s, when it captured investors' hearts in its first incarnation, Digital Switch, as a 1-to-120 shot as a supplier to MCI (Nasdaq:MCIC - news) . But we owned it from 20 to 75 and it was the type of ramp that used to make our day. Day after day. Oh, we loved DIGI. Jeff had just joined our firm out of Goldman Sachs' research department, where he covered tech. My wife headed the trading desk. When we had a good one going my wife used to lead us in chants. They always chanted and played musical instruments to relieve the pressure at Steinhardt Partners, where she had traded for years before she came here. Now she brought her own brand of chanting, kind of a mixture between Kipling's "King of the Congo" and a Gregorian version of FSU's cheerleaders, and every time the stock would rise more than a dollar she would start in with "DIDGE-EE, DIDGE-EE, DIDGE-EE" until the stock would be up a couple. She would directly attribute the stock's levitation to her chanting. In the meantime, the beat of the market was set by DIGI's estimate increases, which came as frequently as the sunrise. When estimates weren't being increased, DIGI was busy announcing contract after contract from Baby Bells and foreign phone companies. A day never went by without hot news for DIGI. This stock was telephony's gift to the Street -- it had everything: convergence, synergy, fiber to the loop, home video, pay TV. It was the equivalent of Cisco (Nasdaq:CSCO - news) , Ciena (Nasdaq:CIEN - news) , Tellabs (Nasdaq:TLAB - news) and Lucent (NYSE:LU - news) all rolled into one. In the meantime, it had attracted the attention of the shorts, who everyday would die a thousand deaths as the stock would be taken and taken and taken. We would all be glued to the offered side of the Nasdaq screen as the offers were lifted, wondering which short fund would be cremated today by DIGI. Short squeeze, takeover, earnings, hoo-hah. We were the DIGI fund. And then one day Goldman Sachs filed a secondary offering for DIGI. It was a big secondary, big enough to let the shorts breathe. Big enough to let the shorts cover. Big enough to alleviate the squeeze. Suddenly, DIGI, the rock of Gibraltar, became DIGI, the house of cards, and this secondary was like a whole deck piled on top of a couple of threes and fours. The day it was priced my wife, Karen, told me, "DIDGE-EE is done-ee." I said, don't be ridiculous. Done? It's got the greatest array of blah blah blah. Now she would have said, "Not." But it didn't hold the print price of the secondary. Not even for a nanosecond. It just died. DIGI rolled over and died. It broke price by midmorning and slid the rest of the day. Oh, what a horrid feeling/day/week that was. A few weeks later AT&T (NYSE:T - news) started winning contracts. (This turned out to be the ascendancy of Lucent, an eventual Ma Bell spinoff, but we didn't even know its name at that point.) DIGI never recovered. It then began a series of blown quarters that rivaled the streak we have now come to expect from disk-drive companies. It was over. Jeff and I stayed long some DIGI at all times, just in case one day it would sell itself. If we didn't, pass me the necktie and find me a beam. Seal Jeff's windows. And today, sure enough, we were rewarded with a bid that got us almost back to even. And at last DIGI can come off the sheets.