Aeroflex (ARX) Message Board

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Technology Stocks : Aeroflex (ARX)

ARX 13.75

-0.4%

12:30 PM EST

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To: MulhollandDrive who wrote (190)	8/14/1997 8:46:00 PM
From: Kerry Lee	of 586

Actually, I don't have time to do a detailed synopsis..here's some things I remember off the top of my head: - lots of congratulations from financial community on a good quarter -CEO explained that Q4 topline year over year comparison was misleading..last year Q4 represented 40% of total year sales whereas this year was better planned -CEO comfortable with fiscal 1998 revenue projections ranging from $110 - $117 million..company well-positioned to capitalize on commercial market ( a new focus vs historical dependence on govt contracts )..the satellite/wireless biz is a key growth opportunity in future years. I think I heard that gross margins were in the 30% range and were likely to grow at least 2 pp in 1998 due to volume leverage against fixed costs, ie increased sales = increased production efficiencies/lower costs. -order backlog is SOLID and REAL, ie these are not ghost orders, there are PO's behind these. For example a $10 million committment from Motorola is not even included in the backlog. -Lucent partnership sounds exciting -Company competes in many different niche markets..the COO was impressively knowledeable in sales/marketing..the only drawback was his thick New York accent <g>. -balance sheet solid..paid off $10 million in debt over past year..lower accounts receivable vs Q4 last year due to earlier shipments and hence earlier collections vs Y.A. -Reading between the lines, I discerned a HUGE amount of confidence from both the CEO and COO and hence the high probability for an upside surprise in 1998. Three analysts cover the Company ( including recent Oppenheimer BUY reco ) and I would not be surprised to see more on the way...In an overvalued stock market, the financial community is looking for small cap situations that have solid fundamentals yet are underfollowed/undervalued. The Company appears to follow extremely conservative accounting practices, ie their EPS numbers are based on FULLY DILUTED shares, which include all the potential stock options and convertible debentures. How many companies report their EPS on a fully diluted basis? -The Bear Stearns guy grilled them on the lack of insider buying. They responded that they had alot of shares already via stock options.Does anyone know how many shares/options they have ( CEO/COO)? -Finally, I got the impression from the type of questions that the story almost seemed "too good to be true"..Did anyone else listen to the call?

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