Rally or No, JJC Is Outta Optical - 500 Beiträge pro Seite

[investor_007]

Rally or No, JJC Is Outta Optical
By James J. Cramer

10/27/00 7:13 AM ET




Click here for the latest from James J. Cramer.

Last night`s earnings proved a pleasant surprise. So, instinctively, the market can rally. It is also Friday, and Friday, as I described many times during the horrid days of 1990, means the market can have a delicious rally led by short coverers locking in gains.

The market`s memory for pain and suffering is downright nil at this moment. Whatever worries we had about an optical slowdown on Wednesday seem to disappear on Friday. To me, that`s a godsend. If you still have stocks that are caught up in the bubble, you can sell them higher.

Yes, optical is a real investment story. And, yes, optical has real winners in it. But so did dot-coms. But the real winners eventually got brought down in value by the lesser stories. Over the course of the next month, I believe you will see the same thing happen to the optic stocks as happened to the dot-coms. There will be some of them that simply fail to perform and they could hurt the others.

Which is why we are not touching them now and are inclined to short them if they advance back to the levels that they were at earlier in the week. I learned my lesson from America Online (AOL:NYSE - news - boards). I dodged a lot of the dot-com bullets in time to save a lot of money. But I held on to AOL and I got clocked. I can tell you that, as great a story as optical might be, AOL is a better one, but it is one of my largest losses of 2000. Because I held on longer than I should have after the Internet bubble burst.

I am not going to let that happen with optical. I am willing to pass up the chance to make some quick money on the upside rally to be sure that I don`t ride anything from this sector down now that the bubble has burst.



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James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long AOL. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer`s writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at [e-mail]

[investor_007]

What JDSU Really Means
10/26/00 11:54 AM ET

I have a commentary piece coming out about the optical world, but people who loved JDS Uniphase (JDSU: Nasdaq) are now telling me that it stands for Just Dont See Upside.

Ouch!!

[investor_007]

Remember Komag? Think JDSU
By James J. Cramer

Originally posted at 11:49 AM ET 10/26/00 on RealMoney.com




Click here for the latest from James J. Cramer.

During the halcyon days of the disk drives, we used to monitor all of the component makers the disk drive companies used. We knew they would swing wildly because there was always a supply-demand imbalance in the system.

To a person, not one of those companies ever saw a downturn coming. Not one. They were the last to see. Always. They were always blindsided. It was their nature. They were blind as moles.

Here is why. You must understand this if you are going to trade the JDS Uniphases (JDSU:Nasdaq - news) and the Corning Glassworks (GLW:NYSE - news) of the world. You take a company like Komag (KMAG:Nasdaq - news), which is a component supplier to companies like Seagate and Maxtor. If you just listened to Komag you always thought things were smoking. At the top!

That`s because Komag was always the end of the line. Komag would get big orders when Seagate had big orders. Seagate would get big orders when Compaq got big orders. If Compaq were to see a slowdown, Komag didn`t see it for months!

That`s how it works in this JDSU world. JDSU is making things flat out because its customers are making things flat out. I fully suspect that JDSU is going to report a great quarter tonight. But JDSU`s customers are just beginning to feel the slowdown from the problems in capital expenditure at the big customers, the large telecommunications companies that put in all of this stuff. Those companies donýt need any more of the stuff made by JDSUýs customers.

JDSU will learn that soon. Not soon enough to help you. But soon. JDSU is Komag, you see.

They just don`t see underneath. They can`t. They will be the last to know of the slowdown. The last to know. They will tell you that all is great because it is. For now. But we trade on the future, not the now.

And the future looks dimmer because of calls like WorldCom`s (WCOM:Nasdaq - news) this morning, where capital expenditures are going down, and because of the vanishing of the cheap financing through junk bonds that the brokerage houses haven`t spoken up about yet.

Where are the next five points of JDSU? Beats me. What is the future of the telco business? Not as good as it was before.

That`s all you need to know. Like with disk drives, that`s all you need to know.





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James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer`s writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to send comments on his column to James J. Cramer .

[investor_007]

I`m trading the optical world on the short side.
Read the pieces above and you`ll most likely agree!
The multiples are so huge, and the upside is
diminishing or better said vaporating!

regards
investor_007