Jeff, TUCK and NEED are small reputable firms. We are not going to get a major firm until the company shows it can perform. Xicor is a little different than that other company you mention because xicor is going to have meaningful eps starting in Q1 2000.
As far as an earnings model:
1) I have roughed one out for 2000 and come up with something near $0.75 eps on something near $140mm in sales.
2) Expect the company to always lowball the street. Raphie can't live with anyone having any expectations and he always will want to surprise with earnings each qtr. If you don't believe me just compare Q3 with the guidance on the Q2 cc.
3) The fab write off will be tricky and I don't have a high degree of confidence that the company will really clean things out with the special charge because they have bean counters for auditors. Therefore, we could still get some margin clean-up in Q1 and Q2 of 2000.
4) As for the depr charges, I would expect that the majority of the charges are in COS with some smaller amount in R&D, and a still smaller amount in SG&A.
5) What do you do with the reserve on deferred taxes? The company has deferred tax assets for the NOL's, but they are fully reserved because of the lack of visibility on future earnings. The rap on them in 2000 will be good earnings, but they are untaxed. Since the company will have two quarters of operating profits under their belt and good visibility on profits for 2000, will they release the reserve on the deferred taxes so that they can record a normal tax rate going forward? They should, but the bean counters probably won't let them.
So Jeff, good luck on trying to get too precise on next year's earnings - too many unknowns. However, I do have a high degree on confidence that next year they will earn $0.75 or more (assuming no taxes).
I have decided to not get too excited or upset with how they handle the accounting anymore and focus instead on the fact that a lot of money is going to be made in this stock if they can grow the top line and wall street gives them a market cap to sales ratio anywhere near their competitors. And if the street ever decides that they have a REAL shot at becoming a REAL mixed signal company then look out. LLTC and MXIM have market caps to sales of over 20!!!
Bruce, I hope you don't let PWC push you around and take this opportunity to really clean things up so we can kick some ass in 2000!!
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