The stock price post CFO change

[Admin]

We're seeing a little bounce in the share price this morning, recovering slightly from the recent downdraft.

In the grand scheme of things, Ahrens leaving makes no difference. It's not like this was VTSS where the books were unreadable and the CEO was storing product returns in his garage (yeah Lou had no idea... right!). The whole back-dating issue of stock awards to the company officers was almost an addendum in that particular instance of corporate malfeasance. The person filling Ahrens' shoes just has to guide the ship "steady as she goes".

AMCC, before the buyout rumor mill started at the end of April, was hovering around $5.25. The rumor mill did give stockholders a clue as to what the market actually thought AMCC was worth in a buyout: $8.00/share. If a buyer was actually making a bid to buy AMCC, they would be looking for at least a price with a 40% margin of error (Benjamin Graham, The intelligent Investor): $8.75. The seller would expect to get about a 30% premium above the $5.25 number: $7.00. If we take the average, we get share price of around $7.88, or just under the peak caused by the buyout speculation. Of course, if there was a deal in the works, the run-up caused by the leak put the kabosh on that.

What Ahrens leaving did signal was that no buyout was immanent, and the share price quickly reverted to what the share price would be without any buyout speculation.

I'll stand by my $7.88/share number.

[christopher]

With a percentage of short holders being at 15% ownership, which is a fairly high percentage, wouldn't the sell-off be occurring anyway? The share price had been on the decline, reaching below the six dollar level before the CFO news being released.

This is why I believe that the whole CFO leaving is an excuse, giving the reason for the shorts to drag the share price down yet again to make another large paycheck.

Do not get me wrong, the CFO leaving is news.

phobos,  I also agree with your reasoning about the current share value and the fact that the share price was taken to a higher level because of the talk of a possible sale.

[Admin]

That's true about the "shorts" christopher (I agree), but it's also true that if AMCC starts hitting its numbers, then those short positions will unwind fairly quickly. And it looks as though AMCC is pretty confident about its numbers this quarter.

apminvestor.proboards.com/thread/26/extrapolated-analyst-estimates-on-yahoo

Oh, and one more thing.

The share price doesn't seem to be plunging back down to the $5.25 level. The market seems to be perceiving these shares as a little less risky after hitting their numbers last quarter and re-affirming guidance* for this quarter. Even if the increase is only by $0.50/share, AMCC is still trading above where it was before the buyout rumor. We'll have to see where it settles.

Imagine what will happen when the short-squeeze hits.



*Remember how CRG would never make any statements between calls and he would trot out the "softness in China" excuse. It took only two rounds of hearing that after Billy Martin was named to the board to get VTSS sold. B*llsh*t has a very short shelf-life. I'm really liking this Gopi. He seems honest and even visionary in some ways. I have a good feeling about this guy.