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Technology Stocks : HDCO - Why sudden dip?
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To: Douglas V. Fant who wrote (475)7/9/1998 11:27:00 AM
From: rich evans  Read Replies (1) of 572
 
Hdco had long conference call yesterday. Business demand very slow about 20% below old combined run rates with CCIR. Pricing down also 6-8% and not just in lower layer counts. Customers are optimistic about future and new products but no change in bookings yet for HDCO and backlog only 107 mill.Lots of discussion on Taiwan competition. It has started to be seen in the higher layer counts but still primarily at the 6 layer or so. COMPEQ's new facilities at Salt Lake could be competition problem. But it was reiterated that the problem is overall demand across the board of all customer segments with emphasis on contract manufacturers and not a loss of market share or competition although competition is certainly changing the pricing expectations of customers. Gross margins were said to be 11% and maybe only 9.5% ( unclear). Anyway operating margin is 0%. But EBITDA is about 15.300 mill for quarter with interest payments of 7 Mill so they do have debt coverage. But are going to go through a downsizing as to head count and other cost measures. Cap Ex has been put on hold except for necessary items or those wwhich have an immediate return.Hope to reduce costs by 10 mill.Cap util is only 70% or so. Malaysia and Austin are both in loss position.Cap EX will be down to 23 mill for Q3 and lower in Q4. VAM is flat and growth stopped for now.Revs will be about 195 mill. Not a pretty picture and no change in sight yet on booking improvement. Replay number is 1-800 6338284 and ID is 451=3556. Still own a lot of this but profits all gone. At the beginning of 97 price was low 20s and now here we are again. The circle of life and stocks.

Rich
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