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Technology Stocks : Catalyst Semiconductor (CATS) -- What's New?
CATS 25.89+1.6%Jul 2 5:00 PM EST
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To: DeadHead who wrote (194)11/18/1997 1:58:00 PM
From: slob  Read Replies (1) of 436
 
Gordon, I agree, CATS is cheap by any P/B or P/S valuation.

Where CATS fails is that they never seem capable of translating Sales into earnings. As I see it they had a fundamental cost/supply problem under the agreements that were in place with OKI. The UMC deal should have addressed these issues, however, UMC had the fire at UICC and has reserved all excsss capacity for their joint venture partners(ESST,OAK,etc).

The situtation that I see is that CATS is in a market where even their efficient competitors (ATML and XICO) are showing losses on Flash. So Cats margins must be under a lot of pressure. Secondly they have lost any ability to capitalize on any future up-swing in the Flash market (UICC fire)and Thirdly they already have most of their BV as Inventory.

On this basis I can not find a way to make Cats business profitable at anytime in the next two years, however I can identify real risks that have them heading for Ch11. I'm ready to take a risk with Cats but not at $1.75. My return models only work if I buy Cats at under $0.75, frankly I don't understand why it is not trading at $0.75 today.

If anyone can show me the error in my thinking than I'm interested.

Slob
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