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Technology Stocks : Lattice Semiconductor

LSCC 62.49

-1.0%

Nov 6 3:59 PM EST

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To: semi engineer who wrote (31)	4/24/1996 10:12:00 AM
From: E_K_S	of 339

Determine your buy point and average in over time... I will make three or more purchases over time into a company which I want to hold long term. You never get the bottom but if you spread it out over time you will get a good overall average price. I did not say Lattice would grow faster than Xlynx or Altera but rather the imputed "expected" growth rate was higher for Xlynx and Altera than for Lattice. It appears that the imputed growth rate for Xlynx and Altera is some what lower now than last year but still at a hefty 30%-40% rate. Accordingly, the price of the stocks carry a large preminum. Lattice's expected growth rate is around 20% but has been priced in the market as low as 12%. In my opinion, Lattice remains at a discount to their expected growth rate. Fair value based on trailing earnings is $38-$40. My expected target (next year) for Lattice based on next years earnings is $56-$58. My two to three year target is $75-$95. The down side risk for Lattice is lower than Altera and Xlynx as the current and trailing earnings are higher for Lattice which supports the current price and higher prices going forward. I believe my average cost on Lattice is $34 as I was buying last year at higher levels. You must be patient and not expect to double your money over night. I try to keep a well diversified portfolio and will limit my total purchase of Lattice to no more than 10% and typically try to keep it under 5%. You never know if you will hit a bump in the road! To futher minimize my risk, I will probably hedge part of my position with covered calls as the stock moves higher. The June 40 calls or June 45 calls look interesting. As my near term target is $54, I will only sell calls close to this number no more than three to six months out. Hope this helps. EKS

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