Atmel - the trend is about to change Message Board

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Technology Stocks : Atmel - the trend is about to change

ATML 8.140

0.0%

Apr 12 5:00 PM EST

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To: Mang Cheng who wrote (8553)	7/1/1998 11:53:00 PM
From: Greg Jenkins	Read Replies (3) of 13565

A G Ewards and Sons (continued) To better align its cost with slow industry conditions, ATMEL also disclosed that it would take a $70 million restructuring charge in the second quarter, related exclusively to 10% headcount reduction (650 people) and the write down of old FAB capacity (anything over 0.5 micron). More specifically, the company will be shutting down its 0.5 micron and greater lines in Colorado Springs and converting most of the remaining 0.5 micron capacity to 0.35 micron and 0.25 micron production. The company expects to realize $30 million in quarterly cost savings from these efforts by the end of 1998. Therefore, we expect the majority of the gross margin improvement to be realized in 1999. Looking into the rest of this year and next, we are pulling our estimates down significantly and lowering our 12-18 month price objective to $20 from $30. While we had prevously been expecting ATMEL to pull out of the industry slump due to it's precsence in the rapidly growing communications and consumer electronics markets, we now are tempering our enthusiasm until the market as a whole shows improvement which we believe will happen in 1999. With the announced restructuring and corresponding cost savings, we believe that ATMEL will be will positioned when the industry begins to improve. At this point, we believe ATMEL represents a good value. However, we don't believe this value is likely to be realized until the semiconductor environment begins to improve, probably during the fourth quarter at best. We would exercise caution when considering averaging down, because the current operating environment is still very uncertain. -------------------------------------------------------------------- Just thought everyone may be interested in this opinion. Greg J.

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