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Technology Stocks : C-Cube
CUBE 36.52+0.3%Dec 12 9:30 AM EST
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To: Andy Chen who wrote (14494)4/24/1997 3:38:00 PM
From: Bob Strickland   of 50808
 
Interesting piece from an Alex Brown report...

* Competition has increased in the VideoCD decoder market with the entrance of ESS Technology. ESS has been winning business by pricing its decoders substantially below C-Cube's, by as much as 30%. We have also heard claims that ESS VideoCD decoder is more richly featured and has a substantial die size advantage (greater than 30%) over C-Cube's that will allow the company to compete aggressively while maintaining gross margins. In discussions with ESS's customers, they reported selecting ESS over C-Cube solely on price and did not cite a feature advantage. With regard to ESS Technology's die size advantage, we independently obtained samples of both C-Cube's and ESS' current production products and had the die sizes measured. We have determined that ESS's is approximately 7% smaller than C-Cube's. With the difference in die size being this small, it is unlikely that ESS would have a major cost advantage in the near term. C-Cube has reacted to ESS pricing, and we believe it will be able to hold at least 50% market share for VideoCD decoders. Also important, we estimate that VideoCD decoders will decline significantly as a percent of C-Cube's revenues in 1997 and 1998.

Revenue (%) 1996A 1997E 1998E

VideoCD Decoder 56% 30% 23%
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