My comments on the quarter and cc:
Sales up 12% sequentially from Q1
BTB > 1
Expect modest sequential sales increase in Q3
Seeing some improvement in Asia, x Japan. Japan hasn't really kicked in yet
Continuing to get design wins
80% of new products are non memory
Battery management chips are sampling
GM improved 7.7% from Q2. 2% of this improvement due to Yamaha production (this seems low to me)
Expect GM to improve in Q3
No C7 production until 2000. Will have positive effect on margins
$1.3mm of cash generated from operations in Q2. The guy from SB can quit worrying about cash!
Paid down $2mm of debt in Q3. $16.5mm now outstanding.
Fab could possibility be sold
Assuming a 3% sequential improvement in the gross margins and a 5% sequential sales increase, my estimates for Q3 (excluding any special charges)are as follows:
Sales 30.1mm
COS 21.4mm
R&D 3.8mm
SG&A 5.6mm
EPS (0.04)
I am hoping they take a write off of the fab in Q3. I don't know what fabs are worth these days, but if we assume it is something close to bv, then they could sell the fab, pay off the remaining debt and put $15mm in the bank! Then going forward, they would get rid of approximately $3mm of depr per quarter and not considering any other gm efficiencies, the gm could pop into the 35% area. If that were to happen and assuming a small sequential sales increase in Q4 vs Q3, we could get something on the order of $0.08 - $0.10 profit in Q4. I won't even post what I think year 2000 could be.
In summary, if you can have a longer than 3 month view of life, I think there is a major wealth building opportunity here. Any weakness should be bought.
SJO |
