Value Line has put out two Investment Surveys that discuss CUBE
so far this year. I don't have issues from before then, I'm a parasitic
bottomfeeder", and it was too high to attract my attention before
then. Thus I can't say when they began coverage.
I like the stock because of its high growth rate and low price. I mean
this after taking into account the decreasing margin in VCD stuff.
Reduced prices is hardly something to worry a semiconductor
investor, it happens to just about every product.
By the way, if you want a severe shock, look at 15 year changes in
Revenues/Share for certain semiconductor makers. For example:
National Semi 1981: $16.43/share
National Semi 1996: $19.16/share (recent PE ~22.4)
Ford 1981: $35.32/share
Ford 1996: $123.55/share (recent PE ~8.3)
Makes you kind of wonder what "growth stock" means.
Here goes with the latest Value Line Investment Survey comments
on CUBE, presumably available at your local library:
June 6, 1997
C-Cube Microsystems announced that second-quarter revenues
and earnings will be much lower than previously anticipated. The
shortfall is a direct result of price cutting in the highly competitive
Video CD segment, and a seasonal slodown in the Chinese market,
which makes up a large portion of the company's sales. The
announcement, made on May 20th, sent share prices down almost
20% on the day. Indeed, the current quote is 45% below the level
three months ago. These difficulties, plus the delays in release of
Digital Video Disk (DVD) players (discussed below), will likely take a
large toll on C-Cube's earnings in the coming quarters. Consequently,
we have lowered our share-earnings estimates by $0.35 for 1997 and
by $0.80 for 1998, to $1.15 and $1.35, respectively.
Delays in the release of DVD players will likely push widespread
shipment back to the fourth quarter of 1997. Despite some difficulties
in the DVD market, we look for these players to be available for the very important Christmas season. Cube continues to be the leader in the development of new DVD decoders, and stands to benefit
nicely when this product finally reaches the market. The latest ZiVA
DVD decoder, with SecureView copy protection and decryption
technology, ensures protection from piracy for the material of
Hollywood studios and PC software creators. (Note: The piracy
issue has been responsible for keeping some Hollywood studios from
releasing their movies on the DVD format.) In addition, the new chip
set offers a high level of integration and has greatly reduced the
overall cost of DVD players.
We have downgraded this issue's Timeliness rank, to 4 (Below
Average). Investors should also take note of this issue's Below-Average Safety ranking, and the company's exposure
to the highly volatile digital-video industry. Furthermore, while the
potential for widespread adaptation of digital-video technology gives
this stock solid capital gains potential through 2000-2002, many
investors may wish to remain on the sidelines until more clear-cut
evidence is available about the release of DVD and the growth of
Digital Video Networks.
Terrence R. Emde June 6, 1997 |
