CPCI - great earning , BARRON's suggest Message Board

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Technology Stocks : CPCI - great earning , BARRON's suggest

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To: Aaron Cooperband who wrote (478)	1/28/1998 8:48:00 PM
From: csm	Read Replies (1) of 586

Just to add a few other observations from the call... Interesting that market segments are Satelllite/Telemetry 35%, Entertainment 35%, and Oil/Gas 25%. O/G has been coming on strong. Ent has been slowing due to rationalization within that industry but now 2nd tier is going digital. Expect post production to grow only around 15-20% but digital broadcast to grow 30-50%. SGI systems were 60% of sales last Q and Sun 15%. Over longer term they expect SGI to be a bit lower and Sun to grow. Bob Kill took the call from California and had been to SGI yesterday. He was quite upbeat about the new CEO at SGI. Felt it was quite a coup. Says staff at SGI are really looking forward to the change. As mentioned before, expect a significant positive announcement involving CPCI coming from SGI in the next 10 days or so. CPCI expects growth to be in distribution channel and that's why they are putting so much effort into improving that (Access Graphics) as they move to supply a larger number of smaller customers over time. CPCI's market research tells them the disk array business is >$2B with about $600M in high performance. They expect to continue to capture a growing share of that market as it moves from JBOD (just a bunch of drives) to disk arrays. Oil and Gas arrays are much larger than post-production with 1-2TB common, so this is a key market for CPCI. They feel they are well placed in this segment. The real cause of the screw up last Q was that customers decided to opt for arrays that gave more bytes-per-buck. They moved away from the 7000 (fibre channel) to the 6500 where storage costs are half as much. This can be expected from customers who don't need real-time throughput. Company is working on NT. They have good benchmark results and are working on technical issues, putting attention on improving their user interface. Raid recorder sales will not make or break sales projections. RR sales include the associated array, software is only about 15% of the price. Could add as much as $2M over last 2 Qs of fy 98. CPCI also expects Access to bring in sales in Qs 3 and 4. Inventory may look a little high since they got a good buy on 9GB drives which will be used on the backlogged $2M orders for 6500s. --- It certainly did sound positive and one would expect things to be looking pretty rosy by this time next year. The current Q looks like it could be quite positive, coming in at close to $12M if you count on $10M in sales and $2M of backorders. If they can do $12M they should have good earnings, maybe $0.22 and that should help the share price. They've still got lots of money. Only spent $1M on stock. Seem to be focused on small, very selective, software companies and could buy more stock if the current buy-back were to be completed. Still looks to me like the cash is just earning income but otherwise not adding to the value of the company. Stuart.

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