ALientech,
You should go ahead and buy OAKT if you think OAKT is going to turn around.
OAKT and ESST of course are two very different companies except they are both fabless companies. But other than that the overlap is quite minimum except in the video product area.(OAKT wanted to get into audio area but withdrawn six months ago, it still tries to get into video area with its VCD and DVD product and bought Odeum from Hyundai). However, there will be consolidation coming pretty soon before year end in the PC product area for all companies.
OAKT's main product area still is CD-ROM controller (#1 in market share), and perhaps DVD-ROM controller. Its VCD/DVD decoder sales are minimum(less than 5% market share). And it has image product area.(Pixelmagic). Most of the products are in PC area.
ESST's main product areas are
(1) Audio ICs: This includes both ISA(30+%) and PCI(25+%) audio;--This is PC area;
(2) Video ICs: This include both VCD(30+%) and DVD(who knows??) decoders;--This is consumer area;
(3) Modem ICs: This include V.34 and V.90 controller-less DSP based modem as well as HSP based modem solution. After Rockwell, TI,Lucent, Cirrus Logic, ESST is #5 in the modem IC market place with market share in 2% to 5% range.---This is PC area plus consumer area.
Once the PCI audio starts to ship in quantities which is forecasted between the end of 1998 and first half of 1999; or the take-off of the consumer DVD decoder markets (not the PC DVD-decoder market. The consumer DVD decoder forecast to reach 2 million units by x'mas, 1998 from 700K units a year ago); or the final shipments of its V.90 modem chipset will make ESS a good investment choice. However, there still are problems.
The problems are:
(1) Low average selling prices. Both ISA and PCI audio IC prices dropped drastically the last six months and are not going to get better unless new ICs are introduced. The VCD chip prices also are at bottom low. The DVD chip price looks a little better but not much.
(2)Intel and Microsoft is moving more of the audio and modem function to the host and under Win98.
(3) The segment zero PC manufacturers are pushing the price of audio & modem chip set lower every day.
Possible solution:
Newer products. Newer audio, video and modem ICs with better features than competitions. In the audio area, new audio IC that outperforms the HSP audio and better than what Creative offers. In the video area, new SVCD chip set that offers more functions to the end users.
Steve |
