INTS - Integrated Systems Message Board

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Technology Stocks : INTS - Integrated Systems

INTS 0.366

-1.2%

3:59 PM EST

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To: John B. Dillon who wrote (313)	9/20/1999 11:07:00 AM
From: Alan A. Hicks	of 327

John, it looked to me like the healthiest quarter for INTS in about three years. Only one quarter over the last three years showed better pSOS/pRISM growth. Gross margins were the best in three years. Revenues from telecom/datcom were 43% and consumer at 15%. New customers were 25% of pRISM sales, a very healthy number. EPS at $0.08 were in line with the H&Q estimate, but below the $0.10 estimate of Lehman. Hambrecht & Quist analyst Matt Belkin in a report titled 'Post-PC Strategy Coalescing. Reiterate BUY' expects a reacceleration in revenue but trimmed this years EPS estimate to 36½ from 55½ given the higher R&D investments. The report noted ISI made "substantial progress in executing on its post-PC strategy and we continue to believe growth reacceleration to the 20%+ level will become a reality in fiscal 2001." "At $10, we believe the shares are compelling given the significance of the opportunity at hand and ISI's strengthening position within the overall embedded market. The name of the game over the next several quarters will be revenue growth and product development. In so far as ISI achieves these near-term milestones, we believe the shares will trade more in-line with growth." Analyst Michael Stanek at Lehman Brothers in a report titled 'Integrated Systems: 2Q Results Show Signs of Recovery' was "cautiously optimistic" but maintained a neutral rating until there was further evidence of sustained license growth. "We do believe that new management has begun to turn the corner and we see promise from Sun partnership and focus on core telecom/datacom and consumer Vertical markets. We also believe that the Internet appliance market could represent a significant market opportunity for the traditional embedded systems players like ISI over next 12-18 months." Stanek also cut his numbers from $0.57 to $0.39 for this year. Given that INTS rose $1 7/16 Friday when both analysts covering INTS cut earnings numbers is an indication that INTS shares are pretty well sold out and investors are looking ahead to better growth next year. Boesenberg has been pretty busy refocusing INTS on the growth opportunities ahead in the embedded market. The Q2 report increased my confidence that Boesenberg is indeed putting INTS back on a growth path and will reach ISI's long-term targets of 25% revenue growth and 20%+ operating margins. I was very pleased with the Q2 report and am looking forward to the Embedded Systems Conference next week.

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