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Technology Stocks : TLAB info?
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To: twt who wrote (5322)4/14/1999 5:40:00 PM
From: Chuzzlewit  Read Replies (2) of 7342
 
Financial analysis of TLAB:

1. Profit margins decline substantially from year earlier levels (63.3% down to 58.7%);

2. R&D spending remained flat on a percentage basis (13.2%)

3. SG&A remained flat on an absolute dollar basis.

4. Operating margins declined to 47.2% vs year earlier 53.7%

Comment: it is not clear whether the erosion in margins reflects a more competitive marketplace or a shift in the product mix.

5. DSO declined substantially from year earlier levels (73.9 days vs. 133.5 days);

6. Days in Inventory declined substantially from 92.7 days to 63.4 days;

7. Days in payables declined from 47.8 days to 27.8 days.

Comment: The results indicate much tighter financial controls -- particularly receivables management. The CCC has decreased from a truly awful 178.4 days a year ago to a more respectable 109.5 days; however, this number is still too high IMO. It is possible that the decrease in days in payables was an attempt to garner additional discounts from suppliers.

On an operating basis ROIC increased to 62.2% (annualized) from 40.7% during the previous year. That is a stellar number! Operating ROIC is operating profit before taxes divided by the sum of equity and LT debt less unrealized gain and losses.

Comment. These were wonderful numbers. The only things that would have made them better would be holding the line on profit margins. However, it may very well be that the big increase in sales was due to decreased pricing, and that elasticity of demand played a major role.

I any event, a tip of the hat to Birck and Co.

TTFN,
CTC
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