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To: jeffbas who wrote (2359)	7/23/1999 12:17:00 AM
From: jeffbas	Respond to of 2920

Followup additions: Second quarter sales may have been helped a bit by some end of life product sales? Omitted from my list of things to come is reduced depreciation charges. My estimate for the next quarter is a 3 cent loss: Sales -- 29.5 Gross Margin -- 30.5% R&D -- 3.8 SG&A -- 5.6 Int Inc -- -.2 EPS -- 3 cent loss I think we pick up the gross margin spread on another 10+% of Yamaha production PLUS we don't have the inventory price burden discussed in the yearend report as persisting through the first half.

To: jeffbas who wrote (2359)	7/23/1999 10:22:00 AM
From: steve olivier	Read Replies (1) \| Respond to of 2920

Jeff, generally they would have to not be using the fab 12 months after the w/o. So, in order to take the w/o in this Q3, they would have to be confident that they could transfer all production to Yamaha by 9/30/00. However, since it sounds like a sale of the fab is a possibility, this whole 12 month issue could be moot. However, in order to sell the fab anytime soon, it seems to me that the sale agreement would have to provide for the buyer to continue to produce chips for xico until the full transition to Yamaha is completed and act as a second source until one of the other foundries could be qualified. I don't know if this is possible. In any event, the w/o or sale in Q3 is not that important in the long run, it would just be nice to get it behind us in Q3 and be able to show a good Q4 going into 2000. As for my sales est for Q3, based on all the other cc's I listened to, I have this feeling that the industry will see less of a summer slowdown than has historically been the case. Therefore, I think the turns business will be good and 5% should be no problem.