Catalyst Semiconductor (CATS) -- What's New? Message Board

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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: WHL who wrote (210)	12/7/1997 5:33:00 PM
From: slob	Read Replies (1) of 436

William, I'd be careful about a buy and Hold strategy with Cats. Flash is a commodity memory product. These are the types of products that Fabs run as "fab stuffers" they keep the utilization at 100% but only return low margins under normal conditions. Now CATS is fabless so they have very low overheads, however as a fabless company they pay a premium for their wafers over those that are run to keep the fab full. CATS needs to be able to compete on the spot market after paying a premium for its wafers. The premimum is probably about 15 to 20%. They need to sell for this plus their own margins. Flash is a real hard business to make cover two sets of margins. 1995 was the last year that commodity memory was in short supply and that year CATS had problems getting enough wafer starts to really make big money. The other problem is that they already have most of their assets tied up in Inventory so even if a major turn-around happened CATS would take at least 2Q's before they could ramp up production. For me Cats is only a trading play you might get lucky with a take-over but thats your best case. Slob

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