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Technology Stocks : C-Cube
CUBE 36.64-0.5%Dec 5 9:30 AM EST
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To: Investor9999 who wrote (8806)1/19/1997 3:37:00 PM
From: Rachel M. Kuecks   of 50808
 
Shalin,

You and others (e.g., Micheal Wiley) seem quite convinced that the ESS chip is "FAR SUPERIOR" to the CUBE chip and that CUBE doesn't have a clue as to how to sell in China and doesn't treat their customers well and .... My question is based on the following assumptions:

1) ESS anounced their VCD chip in January 1996 for April delivery
2) The average selling price (ASP) of the CUBE chip (I know they have many different chips so I'm assuming the arithemetic average of all their chips) for the 2nd quarter was $36 and $32 for the third quarter based on either Needham or Alex Brown analysis after 3rd quarter earnings.
3) The ASP of the ESS chip was between $19 and $20 during the third quarter according to Fred Chan on the ESS conference call after third quarter earnings.
4) Cube sold 1.2m chips in 2nd quarter, 1.4m in third quarter and almost 6m in 1996 while ESS had sales of $1m in 2nd quarter and $2m in third quarter and ? in 4th quarter.
5) Cube has lots of design wins for their MPEG2 chipsets in set top boxes and ESS has none.
6) ESS showed off their MPEG2 chip in April of 1996.

Now given the presumed customer dissatisfaction, ESS's technical superiority and the low ball pricing by ESS, it appears that either CUBE is a sales and marketing marvel or ESS is incompitent in this area.

Could you also comment on Alex's assertion that the competition can't decode format 2.0 for the VCD.

Why do think that CUBE would not go to .35 micron given that TSMC (sp?) is capable of it?

I appreciate your comments
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