My notes suggest that depreciation charges should decrease in 1998 when compared to 1997. Can you confirm?
97Q1 = 34m
97Q2 = 70m
97Q3 = 111m
97Q4 = 40m
Total = 256m
1998e = 212m
Per CC, Atmel expects wafer output to increase by 20% in 1998, but when they move to .35, I would assume this would dramatically increase die output too. Hence, they should have adequate capacity to grow the top line. I think I heard them say that their Colorado fabs are moving to .35 too.
The $64 question(s): Will their Asian customers (40% of sales) continue to buy chips? Atmel says they are getting more stringent on their terms. Will that cost them sales?
Kris mentioned that the bottom line will be revenue driven vs margin driven, so that tells me they expect the top line to grow in 1998. Gross margins should be around 40%, with a long range goal of high 40's. With their product mix improving, there's a good chance they will make it.
Product mix in 1997: Memory decreased 49%->30%, 49 flash increased 4%->20%, and logic (France fab 7) increased 32%->45%. With the French fab ramping up at .35, their COS should improve. Flash is still a third of their business. It's encouraging to hear that flash prices have stabilized and the market is supposed to grow from $2.8B->$3.5B in 1998.
To me, it sounds like they hit a rough patch in the road, but they've got plans to resume growth in 1998. I think most investors will sit on the sidelines in Q1 to see what happens in Asia, and see how Fab7 comes along. However, Q1 may just be the last time we see Atmel shares under $20!
I'm also happy to see Atmel buying back shares at this level. I'm hoping this keeps the stock above $16 tomorrow.<ggg> I bought puts just in case.
NOTE: I AM LONG ATMEL. THE NUMBERS ABOVE ARE FROM MY NOTES, AND MAY NOT BE ACCURATE. DO NOT USE THEM TO MAKE AN INVESTMENT DECISION ON ATMEL!!! |
