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Strategies & Market Trends : A.I.M Users Group Bulletin Board

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To: D VanSwol who wrote (5583)	9/8/1998 1:31:00 PM
From: OldAIMGuy	of 18928

Hi Dennis, There was a conflict between the CEO and the COO which was resolved with the termination of the COO. You've probably already read about that. Unfortunately, the company has been quiet about just what brought that to a head. Nokia has been soaring as a stock for the last quarter while Erricson has been less dramatic. I think the difference is that Nokia has been a primary mover in Europe while Erricson was more influencial in Asia. In any case VLSI has chips available for the next generation of cellular equipment, almost no matter who gets the business. In a small way, MOT would be their competition in that if MOT gets the business, then VLSI wouldn't, because MOT makes their own chips. There's been some rumors that Texas Inst. has been taking some business from VLSI, but that's not been verified. It looks like it was just rumors at this point. Overhanging the smaller end of the chip market is the capital equipment costs for these companies to remain competitive. This has been seen by industry analysts as a reason for concern. They say that the smaller companies won't be able to afford the next few rounds of equipment upgrades and therefore will lose their competitive edge. This is a two edge sword. The bad news is that some companies will fall off in disappear. The good news is that many will consolidate or be purchased by larger concerns for the intellectual property as well as plant capacity. The theory is that the larger entities will then be competitive again by having the resources for upgrades in plant and equipment. My opinion is that VLSI has plenty of intellectual property to offer to a potential suitor. I don't know how to place a price on that. Even if that doesn't materialize, the general businesses that VLSI has chosen are growing nicely (long term growth rather than quarter to quarter comparisons) and VLSI should be able to grow with them. My current position in VLSI is now almost double my previous peak (in shares) and represents my "opinion" better than anything else. I don't have the foggiest idea how long we're going to have to hold the VLSI positions until we start to get some "refunding" of our Cash Reserves. Since I've borrowed from Peter to pay Paul on VLSI, I'm anxious to have that start soon, but that doesn't mean that it will. I need about $16 to start to peddle shares from inventory. That's more than a DOUBLE from last week's close! Of course, if I follow even part of AIM's current Buy recommendation that next Sell price comes down a bit more. Best regards, Tom

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