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Technology Stocks : Southwall Technologies

SWTX 46.99

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Jul 1 5:00 PM EST

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To: Wade who wrote (1012)	1/16/2001 12:39:33 AM
From: TBF	Read Replies (4) of 1143

I do not agree with your assessment at all. A/R film for monitors is manufactured on specific machines, including PM-1 in Palo Alto + PM-6 in Tempe. These machines cannot be used to manufacture XIR film (perhaps they can with extensive modifications, but the process for XIR film is apparently quite different than for A/R film). I believe the company is still capacity constrained for XIR film. I suspect PM-7 is operating near capacity. I would think there is some hope that the energy crisis will increase sale of there energy efficient windows whcih can now deliver up to R-10 or R-12(normal thermal pane w low-E is around R=2.9; single pane is about R=1.0), which is about the same as an insulated wall in a home. I believe these two glazing procucts are new and use two layers of XIR film between two layers of glass creating three isolated layers of air or argon. My understanding is that the A/R film had around a 20 gross margin vs. around a 35+% margin for XIR film (autos and glazing products). Thus it is possible that reduced sales may not hurt margins all that much if the company can take appropriate steps to reduce overhead. However, startup costs in Germany are continuing.

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