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Technology Stocks : ADFLEX SOLUTIONS ( AFLX )

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To: Kent Sarikaya who wrote (217)	1/8/1998 9:00:00 PM
From: Duncan	Read Replies (1) of 718

What happened to all the Adflex followers? Adflex got spanked today. Seagate pre-announced lower than expected earnings yesterday...and with Seagate being Adflex's largest customer in 1997--(35% of revenue)...Painne Weber decided to lower their 1998 EPS estimates from $1.66 to $1.55...but kept approx. $1 EPS for 1997...which will be announced on January 17th...I believe? Painne Weber also kept their buy rating on the stock and said the company has no asian exposure. Mean estimate for AFLX in 1998 was $1.58...but will probably drop to $1.55 or so with Painne Weber's reduction. Note that Painne Weber was the highest EPS estimate for 1998...with the other analysts already estimating in the $1.50+ range. On a positive note, IBM became Adflex's largest customer in the 4Q of 1997 when Seagate's revenue dropped to 15% of AFLX's total revenues. The analyst at BofA Robertson Stephens estimates that IBM will be Adflex's biggest customer in 1998 with Seagate dropping to second place with approx. 17% of total revenues. Also according to the analyst at Robertson Stephens, they had been expecting Painne Weber to lower their high estimate...as did other firms. Robertson lowered their 1998 estimates to $1.50 back on December 15th. Robertson knew back in December, as did others, that the Seagate business would drop in 1998...but Painne Weber was apparently waiting for the Seagate announcment yesterday before they lowered estimates. Once Painne lowered their EPS estimate, it appears as if Painne dumped 120K shares in the last half hour of trading today...which is why the stock dropped so quickly. On another positive note, the analyst communty still expects 1998 revenues to increase by 35%...irrespective of Seagate's weakness. EPS is also projected to grow between 55% and 68%. That's the news. Duncan

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