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Technology Stocks : INTS - Integrated Systems -- Ignore unavailable to you. Want to Upgrade?

To: John B. Dillon who wrote (313)	9/20/1999 11:07:00 AM
From: Alan A. Hicks	Respond to of 327

John, it looked to me like the healthiest quarter for INTS in about three years. Only one quarter over the last three years showed better pSOS/pRISM growth. Gross margins were the best in three years. Revenues from telecom/datcom were 43% and consumer at 15%. New customers were 25% of pRISM sales, a very healthy number. EPS at $0.08 were in line with the H&Q estimate, but below the $0.10 estimate of Lehman. Hambrecht & Quist analyst Matt Belkin in a report titled 'Post-PC Strategy Coalescing. Reiterate BUY' expects a reacceleration in revenue but trimmed this years EPS estimate to 36½ from 55½ given the higher R&D investments. The report noted ISI made "substantial progress in executing on its post-PC strategy and we continue to believe growth reacceleration to the 20%+ level will become a reality in fiscal 2001." "At $10, we believe the shares are compelling given the significance of the opportunity at hand and ISI's strengthening position within the overall embedded market. The name of the game over the next several quarters will be revenue growth and product development. In so far as ISI achieves these near-term milestones, we believe the shares will trade more in-line with growth." Analyst Michael Stanek at Lehman Brothers in a report titled 'Integrated Systems: 2Q Results Show Signs of Recovery' was "cautiously optimistic" but maintained a neutral rating until there was further evidence of sustained license growth. "We do believe that new management has begun to turn the corner and we see promise from Sun partnership and focus on core telecom/datacom and consumer Vertical markets. We also believe that the Internet appliance market could represent a significant market opportunity for the traditional embedded systems players like ISI over next 12-18 months." Stanek also cut his numbers from $0.57 to $0.39 for this year. Given that INTS rose $1 7/16 Friday when both analysts covering INTS cut earnings numbers is an indication that INTS shares are pretty well sold out and investors are looking ahead to better growth next year. Boesenberg has been pretty busy refocusing INTS on the growth opportunities ahead in the embedded market. The Q2 report increased my confidence that Boesenberg is indeed putting INTS back on a growth path and will reach ISI's long-term targets of 25% revenue growth and 20%+ operating margins. I was very pleased with the Q2 report and am looking forward to the Embedded Systems Conference next week.

To: John B. Dillon who wrote (313)	9/27/1999 4:34:00 PM
From: Alan A. Hicks	Read Replies (1) \| Respond to of 327

John: The Embedded Systems Conference (ESC) starts today. This is the embedded software industry's largest trade show of the year. INTS out with nine press releases today. I'll be there the next three days. I'll try to get a sense of what kind of interest is being generated by all the JAVA internet appliance reference platforms announced by INTS. Good review of the conference call. Thanks.

To: John B. Dillon who wrote (313)	10/6/1999 4:56:00 PM
From: Alan A. Hicks	Read Replies (1) \| Respond to of 327

At the Embedded Systems Conference last week ISI appeared more energized compared to the last couple of years and focused on new opportunities in the internet appliance market. Quite a few new sales people have been added. Overall I would expect steadily improving sales and earnings growth over the next year from all the new products, JAVA internet designs, and growing sales force. The main ISI booth was busy and the sales folks seemed pleased with the leads they were getting. There also seemed to be a steady stream of press people coming through talking to the marketing folks with particular interest in the Vantage Internet Appliance partners program. Doctor Design seemed to be quite busy. The various announced internet reference platforms and set-top boxes were on display. The Mitsubishi JAVA PDA developed by Doctor Design was also on display in the Sun booth. They expect to have Sun JAVA design services by early next year. There was high activity at the SDS/Diab booth which was apart from the main ISI booth. The presentation I attended was literally standing room only - no exaggeration. There seemed to be interest in the new SurroundView tool announced at ESC. The SDS debugger is far and away the commercial market leader for Motorola's PowerPC, Coldfire and MCore processors. Now with the integration of high performance compilers from DIAB along with Diab's new Run Time analysis (RTA) suite of tools, the SDS/Diab combination easily dominates compiler/debugger tools market by commercial vendors. With the addition of compiler/debugger solutions for ARM, MIPS, and SH processors announced at ESC, it appears SDS/Diab has good growth opportunities ahead of it. ISI's Epilogue group with embedded networking protocol and networking management tools appears to be one of the most rapidly growing parts of ISI's business. TakeFive was also in the booth and expects a new version of its SNIFF programming tool will also accelerate growth at TakeFive. The analysts following ISI expect about $39 million in revenues next quarter versus ($35 million in Q2) and $0.12 in earnings. In Q4 they expect about $43 million revenues and $0.15. For the year that is $150 million in revenues and $0.36 per share. Next year's analyst estimates are $180 million and $0.70 per share. Lively discussion on Yahoo also.