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Technology Stocks : DSP Group: an incredible bargain?
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To: Webb B Blackman Jr who wrote (960)1/27/1999 12:33:00 PM
From: Tom Caruthers  Read Replies (1) of 1055
 
Hi Webb, S, Kevin,

I'm upset that management was so upbeat at the last cc and didn't talk a pending product transition. Whenever there is a transition like this, it creates a lot of uncertainty about whether or not they will be able to maintain customers and return to the same revenue base as before. When you are in a product cycle, you are pretty much committed to your chip vendor. Now these same manufacturers have time to evaluate products from competitors. That's the downside here.

Perhaps with the introduction of a program-once all-purpose chip that they just announced, limiting the variety of chips that they will have to make will yield cost savings in the future and improve margins.

As far as their wireless thrust goes, I don't know. They have a history of starting wireless products only to abandon them later.
DSP Communications (DSP) was formerly known as DSP Telecom and a subsidiary of DSP Group and was spun off from DSPG to make money for management insiders. Then of course is their sale of Nexus....but for a profit. Oh and don't forget about videoconferencing and Nogatech and Boca Research.

On the plus side, look at those licensing revs....though a lot have likely come from LSI who are phasing them out now.

Also on the plus side is the cash....That will provide a floor. It is possible that we can see downwards of $14...but we are already 1 month through the 1st quarter and if the payoff comes in Q2, then I think anything lower than $14 is excessive.

Tom
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