Hi Zeev,
Thanks! According to it quarterly earning report, I did find something to worry about its near future.
"During the six months ended September 28, 1997, Northern Telecom, Nortel Matra and LGIC accounted for approximately 59%, 20% and 15% of the Company's revenues. The Company's business, financial condition and results of operations have been materially adversely affected in the past by anticipated orders failing to materialize and by deferrals or cancellations of orders as a result of changes in OEM requirements. If the Company were to lose Northern Telecom or any other major OEM customer, or if orders by Northern Telecom or any other major OEM customer were to otherwise materially decrease either in unit quantity or in price, the Company's business, financial condition and results of operations would be materially adversely affected. . The Company's vertical integration strategy entails a number of risks, including a high level of fixed and variable costs, the management of complex processes, dependence on a single source of supply and a strict 8 regulatory environment. During periods of low demand, high fixed wafer fabrication costs are likely to have a material adverse effect on the Company's operations. In addition, the Company's strategy of frequently introducing and rapidly expanding the manufacture of new products to meet evolving OEM customer and service provider needs has caused the Company to experience high materials and manufacturing costs, including high scrap and material waste, significant material obsolescence, labor inefficiencies, high overtime hours, inefficient material procurement and an inability to recognize economies of scale......
Although the Company's future revenue is difficult to predict, the Company believes that the recent significant percentage growth in revenues will not be sustainable and that future growth in revenues, if any, will be more moderate. Cost of Product Sales. Cost of product sales consists primarily of raw materials, RF semiconductor fabrication costs, amplifier assembly and test costs, overhead and warranty costs."
Looks like spct's future earning heavily depends on its top 5 customers. If any of them doesn't do well, spct will suffer too. I will keep it on my radar and wait for a bargain price.
Regards,
IRis |
