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Technology Stocks : Phoenix Technologies (PTEC)
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To: Fred Fahmy who wrote (353)1/16/1997 8:37:00 PM
From: Tim Oliver   of 3624
 
Fred, PTEC's CFO just hired an IR consulting firm that is supposedly working to get some articles placed in major financial publications
and to help them simplify their impressive story into something that
is easier to understand for the typical Wall Street analyst.

To be fair though, they're at the beginning of new product cycles
in several related areas and I think they'd rather speak with their actions than make wild earnings estimates that they have no way
to really predict yet.

For example, it may be realistic to talk about the expected growth
of just one small segment of PICO's business such as smart phones.
Basically the market is expected to go from about 0 (have you seen
any yet?) to 20 million over the next few years. Since virtually
anyone and everyone is designing them, it is likely that this will
happen. And PTEC is likely to be a big player in that.

Embedded industrial Pentium systems is another high growth area
for PTEC, but this is also new but obviously very exciting.

If this was the competitor, they'd have people believing that
$2 EPS in 1998 was in the bag (and you could make a good case for
it). But PTEC management seems to be more philosophically
conservative and wants to produce several quarters of growth in
these many new areas before projecting higher EPS numbers.

I'll admit this is a different way of investing for me. I've
been mostly like what seems to be a majority of the people that
just look for stocks going up dramatically and jump on. They
don't really know much about the companies (and I'm including
institutional buyers in this statement).

I really like the company though and as long as they continue to be
technically aggressive in creating new markets and customers, I'll overlook some of the shortfall in IR skills. They have numerous contracts with Intel and other major customers that are under non-disclosure in many different areas and the public only sees part of the total picture. They don't sell retail products like Microsoft or Cybermedia, but are highly valued partners with many
major manufacturers and software companies, so it's important to
look at how their relationships are growing as much as which specific
products were announced during a particular quarter.

BTW, you can buy analysts if you really want to get coverage. Maybe
we should be wondering which of our stock holdings are up and ready
to collapse due to analysts that were bought. At least we know that
isn't the case with PTEC!
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