ATML's future Message Board

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Technology Stocks : ATML's future

ATML 8.140

0.0%

Apr 12 5:00 PM EST

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To: Chris who wrote (47)	3/13/1997 12:42:00 PM
From: JB	of 195

Thanks for First Call report. My (traditional ratio) analysis of 1995-1996 9 mo. statements (Edgar)....& other data....indicated: Atml's operating income has remained exceptionally stable @ 18.5%-19.1% of revenue....for the last 6 quarters. I interpret this as evidence of exceptionally good management (cost control). However, assuming a 8%-10% drop in revenue (Atml reported revenue could drop "AS MUCH AS 10%)....& historical cost of: goods sold = 50.8% (avg of 1995-1996)....fixed cost (R&D/administrative/general/ selling) = 22.1% ....results in a strong indication of this quarter's EPS = $0.44 to $0.48....most likely $0.45-$0.46....an annualized rate (assuming zero growth) = $1.90. My sensitivity analysis supported a range (best/worse case) of $0.48-$0.44. Conclusions: 1) Atml is rock solid @ 22.5 @ P/E of 12.5 2) Only downside if: a) market cuts P/E below 12.5, or b) revenue drops in 2nd Q....&/or for 1997. The future of Atml is clearly a function of revenues. After revenues drop from $280M this Q to $252M (-10%)....can they repeat their 40% 1996 rate?....which would require achieving a quarterly revenue of $352M (25% above last Q revenue = $280). If so....EPS = annualized $2.61....& stock = $39 @ P/E of 15. All evidence....I have access to....indicates this is realistic....(even ignoring the momentum players....who will drive it to $50+ before Jan '98 if this scenerio is achieved.) Atml has numerous competitors in a variety of product markets. All I have read suggest they are price competitive....relative to performance. My next door neighbor (for 25 yrs) is chief engineer (PhD type) for a privately owned electronic design/fabrication/ installation company (& very successful w/ many Fortune 500 customers.) He is a user....& strong proponent....of their products. All in all: NEED REVENUE GROWTH PROJECTIONS!....reflecting new products, competition, demand/supply, etc.. Seriously Long (@31)....& Holding JB

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