C-Cube Message Board - Msg: 4946618

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Technology Stocks : C-Cube

CUBE 36.61

-0.6%

12:52 PM EST

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To: J Fieb who wrote (33951)	6/20/1998 2:31:00 PM
From: John Rieman	Read Replies (2) of 50808

Someone over on Yahoo has been talking to Hagedorn. Everything looks right, but DVD down again messages.yahoo.com@m2.yahoo.com conversation with cfo norabder0 Jun 20 1998 1:56PM EDT On aconversation with John Hagadorn during the first week of June I recieved some positive information that may be helpful in assessing this quarters performance.1)They are very comfortable with 1st call estimates. 2)Gross margins last quarter were 53% this quarter they will be higher. 3)Divicom will increase sales this quarter by 5,000,000 over 1st quarter. 4)DVD chip sales which accounted for 3% of sales last quarter will be slightly down from Q1. 5)VCD chip sales which was 48% of sales in Q1 will experience its normal seasonal slowdown. 6) VCD chip sales will be up from Q2 1997. 7)The 10% sequential price decline in vcd chip prices may not come into play this quarter because of the new vcd format in China which uses chips that sell for about 3$ more plus the competition is unable to keep lowering their chip prices because their companies are showing huge losses ( OAKT,ESST). 8)CUBE should be able to reduce production costs on VCD chips faster than future price declines on the chip. 9)They will not buy back any of their stock even though it is cheap because it would hamper in protecting themselves against any hostile takeover. It would also reduce the amount of cash available for future acquisitions obviously they wouldnt want to use stock at this price , he did say however they were not agressively seeking to acquire anyone. In closing my personal thoughts are that the company will do 81mill in revs .24 net income in Q2 this will be the first time in which CUBE will come in higher in revs and net income than the prior years comparable quarter which will just be the beginning of something that will continue for along time. It is virtously impossible to sell less DVD chips than last year> VCD chip chip sales this year will be up over 40% over last year without the major price erosion that we saw last year 30$ to 10$. Divicom is expected to grow their revenues by 5mill a quarter sequentially till 2000. There is alot of money to be made on this stock at these prices any fool can see that.

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