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Technology Stocks : Vari-L (VARL) -- Ignore unavailable to you. Want to Upgrade?

To: pat mudge who wrote (1094)	7/22/1999 11:13:00 AM
From: J Stone	Read Replies (1) \| Respond to of 2702

Couldn't hang for the entire conference call but liked what I heard. 1. Drop in income relative to revenue was to due to increased fixed costs. Margins are holding. 2. VARL has not penetrated the subscriber (cell phone) market except for 1 high-tech, currently low volume model. Now that production capabilities are 90% there, the company is aggressively pursuing this market. 3. VARL has established itself in the base station business (75% of market) by having superior technology and better customer service. VARL will be competing against the same companies for the subscriber business (Alps and Murata). Intending to be price competitive, VARL should be able to steal share because of their technological and service advantages. Correct my math if I'm wrong, but even a small percentage gain in the subscriber market means a big gain to VARL's bottom line. If VARL can get an order to fit 5,000,000 phones per year. That's 10m VCO's. Going at a low price of $1/VCO and dropping the current 55% margin to 40%, I get an extra $4million of contribution/year or $1/share. Add that to the current $.50/share of non-subscriber business and then give a conservative P/E of 20 and I get a price of $30/share. If VARL gets a big order and they can announce it (they are restricted from identifying details on certain orders), I would expect the stock price to jump at that time as opposed to when income is actually earned because earnings will be quite predictable. All comments/criticisms are welcome. Jeff