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Technology Stocks : Alliance Semiconductor

ALSC 0.810

0.0%

Jul 10 5:00 PM EST

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To: DJBEINO who wrote (2338)	1/16/1998 5:38:00 AM
From: MoonBrother	of 9582

IMPORTANT INFORMATION!!! Major analysts' coments on Dec. qtr results! Every single one of them has valued Dec. qtr's result above expectation! In the following notes, I will post all 4 analysts' comments that First Call covers. Enjoy. ------------- 08:06am EST 15-Jan-98 Hambrecht & Quist (Robert C. Chaplinsky, (415) 439-34) ALSC: December Quarter In-Line, But This Could Be The Bottom ** Hambrecht & Quist Hambrecht & Quist Hambrecht & Quist ** ALSC: December Quarter In-Line, But This Could Be The Bottom * ALSC reported December quarter EPS of $0.04 on $24 million in revenue versus our estimate of a loss of $0.01 on revenue of $27 million. The upside was primarily as a result of a better than expected earnings contribution from the USC joint venture and slightly higher gross margins. * Excluding an inventory pre-tax charge of $0.10 per share related to risk associated with declining memory prices and a $0.10 EPS contribution from the equity investment in the USC joint venture, ALSC would have recorded operating EPS of a loss of $0.06 versus our $0.07 operating EPS estimate. * ALSC benefited from stronger than expected profits from the USC joint venture foundry which contributed $0.10 per share in the December quarter, approximately $0.03 above our $0.07 per share estimate. * Using the valuation level in which S3 recently liquidated a portion of its interest in USC, we now estimate that Alliance's 19% share in the joint venture is worth approximately $170 million, or $4.30 per share in cash. We continue to anticipate that USC will undergo an IPO during mid-1998 from which the proceeds will be used to fund the construction of another leading edge wafer fabrication facility. * Sales outlook for the March quarter appears to now be improving for ALSC as backlog is strengthening and memory (SRAM and DRAM) pricing are stabilizing from their recent historic low levels. Gross margins should improve in the subsequent quarters as the company benefits from lower wafer prices and an improving mix in next-generation SRAM and graphics memory chips. Recommendation: Business fundamentals are improving slightly but visibility into end market demand and memory pricing remains very difficult. We maintain our Buy rating on ALSC as the stock is currently trading near book value and we believe the majority of the weakness in the company's business environment is already reflected in the stock price. Company: Alliance Semiconductor (ALSC) supplies memory (DRAM and SRAM) and graphics products to the computer and communications markets. The company's product sales mix as a percentage of revenue for the December quarter were DRAM (50%), SRAM (36%), graphics accelerators/memory (14%), and Flash memory (>1%). Alliance also owns a 19% equity stake in the 8" United Semiconductor Corporation (USC) joint venture wafer fab for captive supply of wafer requirements.

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