Trading with Jerry Olson

[madrose1]

FDRY $23.71



10:15AM FDRY and QLGC added to AmTech's Focus List : AmTech adds Foundry Networks and QLogic to its focus list. As for Foundry: (1) Checks with industry and sources indicate that business at Foundry remains strong vs its usual conservative guidance and, contrary to the consensus view, the US government business (32% of revenue) remains strong; (2) Foundry plays in the sweet spot of many industry trends including network convergence (voice, video, data), power over ethernet, and Layer 3/Gig E/10 Gig E upgrade cycle, and (3) its valuation is attractive trading at 27x CY05 with potential upside to $32; Note, stock also upgraded at JMP (see 7:14 InPlay)..... As for QLogic, it's the most diversified SAN player with the lowest cost and highest margin. Other reasons: (1) The biggest fundamental negative, which is uncertainty with the HGST ramp, is no longer valid; (2) Competitive pressures with AMCC and others is overblown; and (3) its valuation is compelling trading at 24x CY05 earnings, near its trough with potential for 50% upside to $65.