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Strategies & Market Trends : Trader J's Inner Circle -- Ignore unavailable to you. Want to Upgrade?

To: LTK007 who wrote (3236)	1/5/1999 9:43:00 PM
From: Tony B	Read Replies (2) \| Respond to of 56535

(S) AVNT - The main issue with this company is the legal dispute with Cadence. Below is a little timeline to get you caught up - 1991: A group of four senior Cadence Design employees leaves to start up a competing chip design software firm called ArcSys, which later became Avant! November 1994: Police search the Los Gatos home of former Cadence engineer Mitsuru Igusa, accused of furnishing Avant! with stolen computer code. December 1995: Cadence files suit in San Jose federal court accusing Avant! of theft of trade secrets. San Jose police and the FBI raid Avant!'s offices. March 1997: San Jose federal judge issues ruling saying that Avant! most likely stole technology from Cadence. April 1997: Santa Clara County Deputy District Attorney Julius Finkelstein announces that six Avant! executives and the company itself are being charged with trade secrets theft. June 1997: Avant! seeks to have county district attorney's office disqualified from the case, claiming it has too cozy a relationship with Cadence. July 1998: Judge Thomas Cain removes himself from the Avant! case. Later in the month, Avant! attorneys move to disqualify two new judges. October 1998: D.A.'s office sends letters to the defendants saying a grand jury is now investigating the same trade secrets case. The most recent news is that a judge ordered the Cadence and Avant! to sit down to attempt to resolve this dispute. After checking with IR, it seems as if Avant! asked the judge to order this. He indicated that they really would like to get this case over with and called it a "waste" and called the push for a meeting a "business decision". When I asked him if he thought that a court loss had already been factored in to the stock price (heh heh, I jumped right for the throat!), he said "yeah" and then backtracked into "i don't know"/"draw your own conclusions". Not sure how to take that, although he was probably just saying "how the heck should I know?". So basically, no major learning experiences from talking to IR (expect he called late and woke me from my nap g). So what should we take from all this? Speaking for myself, in researching this company and its court case and all, I get a bad feeling. But there are some good things. I think AVNT will eventually settle or be found guilty. A lot of people seem to think this. But remember, shorts have been yelling for a year to sell this stock, and yet, its held up well. If not for this dark cloud, I think the stock price would be in a nice upward climb. Anytime you see a company that is hanging around respectable price levels when people are screaming to short it, is pretty impressive. It seems like a solid company that made an early mistake that's haunting them. But of course, I've been wrong before (see below) so draw your own conclusions. Short-term movement - I don't know. Apparently I was wrong on my small pullback prediction, since the price went up another point. I'm going to do a bit of research into the daily movement of this thing and see if I can lock anything down. Also, the whisper number is $.02 higher than estimates (for 4Q), so that might move it a bit. I'll keep everyone up to date with facts as I get them. llater, Tony B