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Non-Tech : Simula (SMU)

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To: Jaime H. Ayalde who wrote (1436)	10/1/1998 1:13:00 PM
From: Noblesse Oblige	Read Replies (1) of 1671

Hi Jaime.... Trinske doesn't have much to do with the problems at Simula. The problem isn't increasing sales: Simula has done a first rate job of creating new products for new commercial markets. The problem is execution. And, it is solely related to the 16G operation, which is still not operating efficiently despite the plant consolidation in San Diego. New programs and certification costs have been more costly to implement than previously thought. Sales will be ramping as expected in the fourth quarter, and almost certainly will meet previous delivery targets. The company's own published estimate of $130 million in 1999 revenues, when coupled with a low $30 million judgement on ITS sales and fairly regular government business implies 16G revenues of approximately $5 million per month. If management can focus and perform on the real issue, profitability, this investment will still turn out well. However, based on the last four quarters, it would be incorrect and unfair to suggest that many "street" observers are without doubts. Have a good day.

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