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Technology Stocks : Vitesse Semiconductor

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To: lazarre who wrote (1594)	9/15/1998 7:42:00 PM
From: MoonBrother	Read Replies (1) of 4710

Merrill's Analyst's Latest Comment - We view the recent volatility in VTSS stock as opportunity to accumulate the shares. --------------------------------------------------------------------- 03:00pm EDT 15-Sep-98 Merrill Lynch (Investor Support) AMCALL VTSS NT SUMMARY RESEARCH SUMMARIES:Intra-Day Special Calls; VTSS; NT ML++ML++ML Merrill Lynch Global Securities Research ML++ML++ML RESEARCH SUMMARIES Intra-Day Special Calls; VTSS; NT Investor Support 15 September 1998 Vitesse Semiconductor (Vtss; $26 3/8; C-2-1-9) Sep98E $0.65 99E$0.83 o We believe investors are concerned about Tellabs difficulties impacting VTSS however only 3% of the company's revenues are derived from Tellabs. o Ciena and Tellabs together constitute between 5-7%, not a significant amount, in our opinion. o Tellabs difficulties appear to be centered on execution and are not a result of end demand issues. We think if there is any market shift in favor of Lucent it should not impact VTSS as the company sells to both Lucent and Tellabs. Lucent remains VTSS's single largest customer. o There has also been some concern regarding a potential decrease in VTSS automated test equipment. o The company stated that business will be up sequentially this quarter. We have factored a down sequential quarter into our model to be as conservative as possible. o After speaking with the company we continue to be comfortable with our SepQ EPS estimate of $0.19 and our FY98. o We view the recent volatility in VTSS stock as opportunity to accumulate the shares. o We maintain our intermediate term Accumulate, long term Buy rating. (J. Osha)

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