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Technology Stocks : Vitesse Semiconductor -- Ignore unavailable to you. Want to Upgrade?

To: OldAIMGuy who wrote (2648)	6/29/1999 9:59:00 AM
From: GP Kavanaugh	Read Replies (2) \| Respond to of 4710

I guess we were getting a little close to the old price target. Time to raise: 06:53am EDT 29-Jun-99 Salomon Smith Barney (WESTMONT 1-415-955-4933) VTSS VTSS: Raising Price Target --SUMMARY:--Vitesse Semiconductor--Semiconductors --EARNINGS PER SHARE-------------------------------------------------------- FYE 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year Actual 09/98 EPS $0.13A $0.15A $0.18A $0.21A $0.67A Previous 09/99 EPS $0.19A $0.22A $0.23E $0.25E $0.89E Current 09/99 EPS $0.19A $0.22A $0.23E $0.25E $0.89E Previous 09/00 EPS $0.27E $0.29E $0.31E $0.33E $1.19E Current 09/00 EPS $0.27E $0.29E $0.31E $0.33E $1.19E Previous 09/01 EPS $N/A $N/A $N/A $N/A $1.50E Current 09/01 EPS $N/A $N/A $N/A $N/A $1.50E Footnotes: --FUNDAMENTALS-------------------------------------------------------------- Current Rank........:1H Prior:No Change Price (6/29/99).....:$65.69 P/E Ratio 09/99.....:73.8x Target Price..:$80 Prior:65.00 P/E Ratio 09/00.....:55.2x Proj.5yr EPS Grth...:40.0% Return on Eqty 98...:17.9% Book Value/Shr(99)..:5.01 LT Debt-to-Capital(a).65% Dividend............:$N/A Revenue (99)........:279.40mil Yield...............:N/A% Shares Outstanding..:81.9mil Convertible.........:No Mkt. Capitalization.:5380.0mil Hedge Clause(s).....: Comments............:(a) Data as of the most recently reported quarter. Comments............: --OPINION------------------------------------------------------------------- Vitesse Semiconductor derives 80% of its sales from broadband communications applications, including SONET/ATM, Gigabit Ethernet, Fibre Channel, and dense wavelength division multiplexing (DWDM) applications. Lucent is Vitesse's largest customer at roughly 20-25% of sales. Automated test equipment (ATE) component sales account for approximately 20% of Vitesse's sales, with most shipments going to Schlumberger and Teradyne. Vitesse had an unusual situation among Internet IC suppliers over the last six months as it brought a significant chunk of new capacity on line. As a result, lead times shortened and book-to-bill ratios for the company have fallen. In addition, Lucent has been in the process of out-sourcing more production to contract manufacturers, distorting the order picture. The company appears to have weathered this transition period reasonably well, however, and we believe the deterioration in business visibility has stabilized or marginally improved in the last two months. Our $80 price target for Vitesse is based on 45x the implicit 2001 earnings power of $1.70-1.90. This is a lower target multiple than we have used for either of its two best comparables (AMCC and PMCS), which may prove conservative. ---------------------------------------------------------------------------- Salomon Smith Barney is a U.S. registered broker-dealer. It is a member of Citigroup Inc. and is affiliated with Citibank, N.A. and its subsidiaries and branches worldwide (collectively "Citibank"). Despite those affiliations, securities recommended, offered, sold by, or held at, Salomon Smith Barney: (i) are not insured by the Federal Deposit Insurance Corporation; (ii) are not deposits or other obligations of any insured depository institution (including Citibank); and (iii) are subject to investment risks, including the possible loss of the principal amount invested. (c) Salomon Smith Barney Inc., 1999. All rights reserved. Any unauthorized use, duplication or disclosure is prohibited by law and will result in prosecution. Please refer to ticker SSBDISC for important Salomon Smith Barney Disclaimer information. WESTMONT 1-415-955-4933 First Call Corporation - all rights reserved. 617/345-2500 END OF NOTE GP