C-Cube Message Board - Msg: 1786786

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Technology Stocks : C-Cube

CUBE 36.54

+0.1%

Dec 15 3:59 PM EST

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To: VINTHO who wrote (18690)	7/17/1997 9:09:00 PM
From: Craig Gordon	of 50808

I rate Cube's performance as a 7.5. Here's why: They have been in a real dog fight with ESST for the dominant position in the VCD market. ESST's sales dropped 35 Mil qtr to qtr. Cube's only dropped 25 Mil. Alex wasn't giving any unit numbers on VCD sales on the call. This is because of the numbers that he gave last time, which was a mistake. If he gave us the numbers we (and the competition) could precisely figure out what is really going on with Cube. We could even get a trend. IMHO Cube probably lost 35 Mil in VCD sales like ESST, but made up 10 Mil in sales increases in it's other divisions. That being said IMHO Cube will add $10 Mil in sales in the 3rd qtr and 20 Mil in the 4th qtr before you add in the DVD sales. This makes me very bullish on the 4th and 1st qtr of next year. Another huge positive is the way gross margins held at 56%. I had thought from the call last qtr that they had held their margins by squeezing profits out of the non VCD divisions. Maybe they have to a point in Q2. This high gross margin is very positive. One last rambling point. They invested another 15 Mil in R&D in Q2. That is great! They could have cut R&D to make the street happy, but that would hurt the company long term. They didn't. I think that that is great management. I run a company and I know how hard it is to drain the swamp when you are up to your ass in aligators. Great quarter CUBE! Congrats. IMHO we have seen the fundamental bottom and fundamentally CUBE's business will improve at an increasing rate heretofor. As far as the future prospects for the per share price here are my predicitions. Bottom 17 if the market doesn't crumble. 12 1/2 if the market cracks. If the market holds by year end Cube will be back into the 30's possibly at 36. By the Jan 15th 1999 Cube should hit 60.

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