CRUS, good buy? Message Board

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Technology Stocks : CRUS, good buy?

CRUS 130.36

+0.1%

Jan 30 3:59 PM EST

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To: Bosco who wrote (6932)	4/22/1999 10:08:00 AM
From: ted quinn	Read Replies (1) of 8193

Bullish on CRUS: I recommend that all of you listen to yesterday's conference call. As someone who has followed this company for some time, I can tell you that this is indeed a new company with newly focused and driven leadership capable of setting a corporate vision and goals and achieving them. French to his credit sees CRUS not as a portfolio of businesses as Hackworth did, but as a portfolio of competencies. From these core competencies will grow core companies and ultimately products for market. This is the opposite of what Hackworth did up to 1995 -- assemble a hodge-podge of businesses and then sit back and hope that some synergies and market leadership resulted. His shoddy execution of this weak strategy knocked off 90% of the company's market cap from the stock's high. The other albatross around crus's neck that French has shaken free is the company's costs. For the last 3 years, crus, a $400 million per year company, has had the cost structure of a $1 billion company. The company was like a midget walking around in a giant's clothes. Doesn't matter how good the products are that you make, you are guaranteed to lose money. Now French has cut back fixed costs to such an extent that the company will be breakeven at $100 million revenue per quarter, but will become very profitable with any growth. Finally, the new product development and crus' leadership role in audio where many new products are expected with the new model of distribution of music (i.e. MP3 and WMT) is very exciting. The replacement of Shelton (the biggest Hackworth appointee still in management) with French's guy will help the company greatly. Interested to note that crus and pmcs faltered at exactly the same time 3 1/2 years ago. it is worth taking a look at that history. Yesterday, for example crus closed at 8 while pmcs closed at 92. The increase in pmcs yesterday was 8 points! They gained $2.5b in market cap (or one-half of crus' market cap) in a single day. Judging by their future-looking questions, the analysts on the CC yesterday were very interested in crus. Do yourselves a favor and listen to the conference call (info available on yahoo board). I think there is some money to be made here (finally).

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