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Technology Stocks : CRUS, good buy? -- Ignore unavailable to you. Want to Upgrade?

To: Toni Wheeler who wrote (7030)	7/23/1999 10:22:00 AM
From: Synapsid	Read Replies (2) \| Respond to of 8193

I also listened to the CC. I've held CRUS in the past and I may get back in when the turn-around looks to be reality. Here's my summary. Revenues were 107.6M for core businesses, a 9% sequential decline from last quarter. Still a material amount of non-core business product sales (about 13M). Gross margin was about 41%, gross margin for divested products was at a similar level. The company has essentially closed the joint-venture agreements. $150M cash was paid this week (not yet reflected on quarterly balance sheet). I'm not sure about the $32M worth (3.56M) shares that have been put in escrow (about 6% of the total outstanding shares). Does this transaction have a dilutional effect? Sales of CD-RW controllers were very strong (as I had expected) with 50% market share, with customers such as Sony shipping to PC OEMs. This product is a significant part (but still <50%) of mass storage sales (probably between $15-$20M). The market for CD-RW drives continues to grow. Audio chip shipments reached record levels in units and revenues. Greater than 50% PC audio. PC audio prices decreasing but offset by high volumes and cost reduction. Well positioned for software audio codecs. Strong position in high-end and consumer audio. French put a lot of emphasis on the ARM-based portable MP3 player chip solution currently being evaluated by several major consumer electronics OEMs for Christmas shipment. Personally, I think PC audio is a declining market and it is high time for Cirrus to loose dependence on PC audio sales. The 3Ci single-chip solution for hard disk drives will be in volume production in the second half of this year to a major OEM (they wouldn't say, but we all know it's Fujitsu) for mainstream desktop drives. Cirrus believes it still has a one year lead on competitors. Cirrus has started sampling a 0.25 micron, 500 Mbits/s CMOS read-channel device which has attracted the interest of several disk drive OEMs. The ARM-based open architecture (3Ci and Lucent's efforts) is being evaluated by additional OEMs and the company appears to be well-positioned for additional 3Ci customers, aided by the technology display of the read-channel chip. However, the company said that there is a four to six quarter design-to-production cycle in the disk drive industry, so material impact would be well into the future. The DVD player/DVD-ROM controller chip will be in production this year (which is very, very late). In the communications area the company reports internet equipment chip design wins at the expense of Level One. The company is forecasting a sequential revenue increase for the next few quarters. There will be a profit only before interest charges of $5M/quarter. My own impression is reasonably positive but I am still not convinced the company is truly turning around revenues. Much of the promising business is still projected at the end of the year and beyond, which is story that I have heard before from this company, although I am sure it is much realistic at this point.