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

To: Glenn D. Rudolph who wrote (12190)	10/9/1998 5:47:00 PM
From: put2rich	Read Replies (1) \| Respond to of 12298

Glenn, You own APM too? I do not, was in/out 8 mos ago for small gain. I think this is dead for at least 6 more mos or do you think a good buy at 3+ ? Good luck

To: Glenn D. Rudolph who wrote (12190)	10/25/1998 10:46:00 AM
From: Alain Dubreuil	Read Replies (1) \| Respond to of 12298

Comments from Value Line Large losses are expected for Applied Magnetics over the next several quarters as sales levels remain low and RandD expenses climb. Shipments have fallen dramatically, mainly because Western Digital (WD), its largest customer (80% of 1997 sales), has reduced its production schedules. This initially was the result of an oversupply of hard-disk drives in the distribution channel. Then, WD decided to phase out thin-film drives, and accelerate the ramp-up of magnetoresistive (MR) products (an advanced head technology that is more in demand). All told, APM has suffered cancellations, production reschedules, and price reductions. A return to profitability will depend on progress in the MR area. Pending final qualification, volume production should begin later this quarter. Applied is also making headway in developing giant MR technology (next generation); the company began delivering units to drive manufacturers for initial evaluation in the third quarter. Success in MR clearly hinges on whether Applied's engineering and production teams can meet new deadlines, needed for timely execution of production ramps of forthcoming products. As in the past, this transitional period will take its toll, but APM should persevere. Industry growth prospects look good for the long term. The increasing number of multimedia and high-end applications, such as corporate networking and the Internet, plus the accelerated use of notebook computers, should keep demand for greater data storage capacity and performance increasing at a strong pace over the next 3 to 5 years. Although the risk here is significant, the stock could generate large returns by 2001A2003 if APM can just overcomes near-term obstacles. The company could very easily find itself struggling to for cash by this time next year. And with debt already near 50% of equity and its future cash flow somewhat ill-defined, APM may have trouble finding financing opportunities. Warren Thorpe October 23, 1998