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Technology Stocks : Quickturn (QKTN)
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To: Mike Chen who wrote (86)4/10/1997 1:52:00 PM
From: Andrea Bornschlegel   of 251
 
Mike,

Why would one add R&D to gross profit? I understand that you called
it a ruse and don't seem to believe in the methodology, but I can't
come up with any rationale behind it at all.

My major concerns about the numbers are the operating expenses.
Even if QKTN had reported revenue growth over the first quarter
of '96, its operating margin would have taken a big hit.
My methodology was as follows:
* revenue 20 percent above Q196 = $28.6M
* use Q197 gross profit percentage
* use same numbers (not percentages) as Q197 for R&D, S/M, G&A
* exclude merger costs

Outcome: Q197 operating income 9.3%
Q196 operating income 15.5%

Yikes.

Andrea
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