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Technology Stocks : Printronix(PTNX)
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To: Harry J. who wrote (95)1/11/1999 7:05:00 PM
From: David Aegis  Read Replies (1) of 113
 
Anatole and Harry: I bought some more PTNX after the earnings announcement. My notes from the conference call include the following impressions:

1) Management was upbeat about sales in China and India. China was of particular focus on the call. Management said Printronix had about 20% market share, and IBM had another 10%. And management thought it had a good shot at winning half of IBM's share through an OEM contract with IBM by dispacing the Japanese manufacturer currently used by IBM on an OEM basis.

2) Management said PTNX would enter Taiwan with a Kanji character printer in 1999.

3) Management also highlighted new products such as bar code verification, a new low end line matrix printer and expansion of the thermal printer line for 1999 for which the R&D and marketing groundwork had been laid in 1998.

I calculated that there were about 11.5 cents of fully taxed incremental R&D and SG&A costs in the Dec98 quarter versus the Dec97 quarter. Some of the increased expense also went into construction on the new building in Irvine. So on an incremental basis, I did not think $0.38 (fully taxed) versus $0.38 last year was all that bad. All of this investment in new products and production facilities should bear fruit in '99 and '00. However, there is still a risk that the Asian contagion could torpedo near term results well below current Wall Street expectations. But PTNX has a great balance sheet, so I don't think they'll go bankrupt. The stock is tainted by the cyclical factor and the small cap factor. Not a good combination in the current market environment. But I have a contrarian approach, so I'm willing to wait.

--David
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