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Technology Stocks : SDLI
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To: scott who wrote (30)3/5/1997 5:37:00 AM
From: Toby   of 297
 
There is a lot of uncertainty with this company right now. They admit to ongoing yield problems which impact gross margins. My reading of the 10k is that they have had to substitute a more expense process for the one in question which probably slows production and increases cost, all to insure a decent amount of product. They don't say which product it is however. Anyone know?

Second question mark are the lawsuits. It certainly sounds like SDLI is reneging on obligations arising from the spin-off from Xerox to transfer technology. Spectra seems to be using the contact to obtain sensitive information on their now competitor. I'm not a judge, but SDLI did agree to share everything with these companies and is now only disputing whether or not is has to actually transfer the technology, or simply 'share' it, whatever that means. Chances are the technology isn't very useful without a transfer. They can tell you that they use machine A for a given process, but it doesn't do you much good if you don't get the knob settings and methodology behind it. Lawsuits are only downside for SDLI. If they really are stonewalling, they could get slapped with damages. I think that's a bigger risk than their being forced to transfer technology. By the time they transfer any 1993 technology (should they lose) it will have been long since supplanted by newer processes.

So I see a company which gave an earnings warning (low yield through this quarter at least) and has a potential legal liability. This is enough to keep me away for now.
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