SMIT (Schmitt Inds)likely to post 400% earnings gain YoY Message Board

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Technology Stocks : SMIT (Schmitt Inds)likely to post 400% earnings gain YoY

SMIT 0.0155

+3.3%

Oct 14 2:00 PM EST

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To: Brian Meath who wrote (11)	5/2/1996 10:34:00 AM
From: Douglas Goodyear	of 276

You're right about objectivity. I re-read my last post, and it was way too enthusiastic (though I'm still real excited about this company. I've spoken a few times with their investor relations department. I don't get the sense that the prime engine for earnings growth is going to be the wafer inspection unit -- not for several years, anyway. If all goes well, for FY 97 they're only going to be able to produce about 6 of the machines. At $125 - $130K apiece that will be big money for them, but it's certainly not enough to make Tencor or KLA or anyone else shake in their boots. It's the TMS-2000 (the hard disk drive surface scanner) that will be ramping up in a big way. For FY 96 that ends this month, they'll sell about 35 machines at roughly $65K apiece. For FY 97 they're looking at 5-6 per month, or about 70 for the year. And the following year it'll be 10-12 per month, so production is going to quadruple. And the clear indiciation from their IR department is that the reason earnings are improving so dramatically is because of this product -- the correlation between earnings increases for the past 2 quarters and sales of this product is about as direct as you can get. I don't know when the Red Chip Alert is going to update its report on this company, but it should be soon. If I hear anything, I'll be sure to let you know.

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