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Technology Stocks : C-Cube
CUBE 37.53-0.2%Jan 30 9:30 AM EST
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To: Andy Chen who wrote (944)6/13/1996 1:05:00 AM
From: Eric Thacker   of 50808
 
Some comments:

1) a higher tax rate was used in 1Q 1996 earning. therefore, including
the tax they paid, cube will show a much more robust earning growth
rate compared to 4Q 1995

2) divicom acquisition write-off will enable cube to receive tax cut
refund benefits. this will make them go back to revise their earning
# (possibly for 1Q 1996). however, tax cut will mostly be accounted
as a non-recurring inflow.

---I don't really know how significant this will be to the company's earnings. It may only be marginal. Do you have any eps gain estimates from tax differences?

3) exploding and faster-than-expected introduction of digital television
service. this includes :

1- deployment of satellite-TV worldwide

---I think this is THE fundamental source of growth for the company in the next 5 years. Growth in Asia, particularly south and southeast Asia, is expected to be tremendous.

2- replacement of traditional analog set-top with digital set-top to reduce
cable company costs and increase channel capacity.
(digital set-top are supposed to be more cost-effective than analog for
cable tv companies)

---There has also been talk of direct broadcast digital tv. I don't get a sense of excitement about this niche. It doesn't mean it won't be significant, though.

---What happened to 3)?

4) higher than expected karaoke sales in Asia due to the exploding
demand in China and product replacements regarding the life time of
video CD players.

---This may be important, but I think it will be dominated by (1) above.

Remember folks, this is a market on the verge of explosive growth BUT it may not materialize for a year or two. If you are a long-term investor, sit back and dollar cost average. If you're speculating, I would think there are better short-term pickings elsewhere.
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