Exar: any opinions Message Board

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Technology Stocks : Exar: any opinions

EXAR 12.99

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Jul 14 5:00 PM EST

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To: Jaipal Patheja who wrote (66)	2/6/1997 7:07:00 PM
From: Robert Talty	of 118

I read their home page and decided not to buy. If I understand their strategy they hope to be the 3rd supplier in lots of analog / mixed signal markets. In my opinion you aim to be the primary supplier and settle for second if you have to. If it looks like you wont be the top or second supplier than you get out of that market. My reasons for saying this are real simple. - The primary supplier gets a lot of help introducing the part to the market, and usually ends up with over 50% of the market. - The secondary supplier also gets help and about 20 - 25% of the market. - Third supplier has to have a better product than 1 or 2 and must be cheaper to get the socket. The real kicker is that he gets no help developing the product and has a reduced market window to recover costs. In summary you have higher R&D costs, get lower margins, and settle for under 10% of the Total Market. Work out what this means for earnings and make your own conclusions. regards Robert Talty

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