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Technology Stocks : Oak Technology (OAKT)

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To: Baoho Chang who wrote (3942)	2/24/1998 11:14:00 AM
From: Bonzo	Read Replies (2) of 4335

Andy and Baoho thanks for your replies - good work. If OAKT will be providing DVD-ROM controllers, as they are currently doing with CD-ROM, then I fail to see where the drop-off in their current run rate will occur. Baoho sees little or no competition which is OAKT's current CD-ROM market position. So as the market transition from CD to DVD occurs (its already slowly underway) OAKT will be selling to both markets, perhaps with a slightly higher ASP in the case of DVD controllers? The key as Baoho, Andy, myself and others have said many times is this: OAKT must win a major OEM contract for MPEG2 and/or IDB. The Audio/Graphics business is lame duck and OAKT will just use the cash to pour back into their R&D, or buy shares with. The shareholders will not see dime one. Without a major contract win (and Sanyo ain't it) how do we get back to double digits? Profitable is one thing. Profitable with basic commodity type products does not get you a reasonable P/E. Where is the growth driving product or business? Pixel Magic? Its doubtful it would be DVD Controllers alone.

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