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Technology Stocks : Vitesse Semiconductor

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To: Lizzie Tudor who wrote (4228)	10/21/2002 11:53:11 PM
From: The Ox	Read Replies (1) of 4710

SG+A, as a percentage of revenue, increased to 46% in 2002 from 23%. As yearly revenue declined 58%, SG+A spending only dropped 13%! # of shares during this same period increased by 9%, adding dilution. Shareholder equity less goodwill dropped from $3.95/share to $1.51 - a drop of over 61% per share! Shareholder equity will continue to drop until company can achieve break even. Since they are guiding for a burn rate of $15 million next quarter and under $15 for the next quarter, I think it's safe to say that shareholder equity could drop another 15 to 20% over the next 4 quarters. If they write down more intangible or depreciating assets, obsolete inventory, and/or some bad A/R, shareholder equity would drop even further. VTSS, just another company that got caught up in the bandwidth demand lies put out by WCON/UUnet. It's good to see the diversification of potential product lines but they are paying a very heavy price because of their previous focus on the telecom long haul core. Competition has increased as more semi companies who focused their attentions on the long haul industry revamp and look for new markets. VTSS has a tough road ahead of them.

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