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

To: David Rosenthal who wrote (1770)	7/22/1999 11:49:00 AM
From: David Rosenthal	Read Replies (1) \| Respond to of 1853

Here is my conference call summary: 1. Current quarter results were based on prices set in existing contracts which are not very favorable. Some of this effect will be seen in the 3rd quarter also. Profitability in 2000. 2. Contracts with Motorola in renewal negotiation and NSM contract allows for some price negotiation. Tower thinks that prices have passed their low point and expects higher prices next year. They are negotiating contracts to be able to take advantage of price increases. 3. Operating revenue increased from the first quarter to the second quarter. This did not flow through to net income due to a tax advantage no longer being available. 4. Orders were ramping in Q2. Tower was not able to fully take advantage in Q2 and the results will be more apparent in Q3. 5. Product mix of new specialized technology to old will be 50% in Q3. 6. 50% of new customers are from Europe and Far East (Taiwan specifically mentioned). 7. Image CMOS technology capable of 5 megapixels. Tower is able to get a good price for finished products (prices like two years ago). 8. WSI is a customer for embedded eprom products and it sounds like Tower is the sole source for one or more of their products. 9. Saifun agreements - Tower owns about 15% of Saifun. Tower has the only license for foundry work based on MicroFlash. Also, only limited licenses to other chip companies will be granted by Saifun to help the acceptance of the technology. Tower will also get production projects from Saifun. Saifun is currently under confidentiality agreements with potential customers and that limits the amount of information that can be discussed about them. My comments: Overall very positive. I was glad to see that the new products are getting into the mix. The resolution of the stitched CMOS sounds excellent. The lack of news on MicroFlash, other then that there are product prototypes, seems to be driven by confidentiality and, hopefully, not lack of success. If the technology takes off, Tower's license should allow them to do real well, possibly partnering with someone. Dave