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Technology Stocks : ACTM $100 Million Cable Modem Contract with MOT -- Ignore unavailable to you. Want to Upgrade?

To: Rob Preuss who wrote (1113)	10/20/1999 6:55:00 PM
From: Rob Preuss	Read Replies (1) \| Respond to of 1250

Well, I just got off the conference call. I'll offer a few remarks, but not a fully comprehensive review as I have in the past. Things are looking VERY good and I expect the stock will be up at the opening tomorrow. This is the first quarter for which they've reported combined results with CMC. They reported $0.28/sh EPS vs expectations of $0.23/sh. That alone should be reason enough for the stock to open up tomorrow. The merger with CMC is going VERY smoothly and is ahead of schedule. They now count Alcatel as one of their new customers with an initial $20M contract for one product and quite a few other products in the works. The combined size of the company helped them clinch the deal with this customer together with the facts that: + Alcatel wanted to move some Mfg to the US, + Alcatel wanted to outsource more of their Mfg, + Alcatel found that the Corinth MS and Mexican facilities ideally met their needs in Dallas area. CMC had started courting Alcatel before the merger but it was the merger that catalyzed the deal. Gross margins were at 8.2% for this quarter and should remain there for the next quarter... then they'll start creeping up toward 10% throughout 2000 (but maybe not quite reaching 10% by 12/00). They're adding 5 new SMT lines this month. 4 will go to Mexico and 1 will go to Hudson MA. This will give them a total of 48 SMT lines... they'll then have the capacity to do over $1.0 billion/year in sales. Sales for Q4 should reach over $200M and Q1CY00 should be higher still. They have a $200M shippable backlog and they've been building inventory to remove any concerns about possible supply problems. Tax rates are creeping lower from the 40% rate they've been using in the past. Expect about 39.5% in Q4 and heading for about 39% in Y2K. They're looking at expanding their facilities in Massachusetts and California as well as in SE Asia and Europe. They've established an internal team to look at using their new larger size to gain some clout with customers and thereby reduce their cost of goods. They but $800M in parts each year so even a small percentage reduction in costs can add significantly to the bottom line. John Pino used the term "very doable" when an analyst suggested perhaps 1%... but I got the sense that 2% or 3% might be achievable too. There were many analysts on the call asking questions and every one of them preceded their question with words like "congratulations on a great quarter". Analysts included: Bill Cage (JC Bradford), M. Carboy (DB Alex Brown), Tony Bose (AG Edwards), Michael Zimm (CIBC Oppenheimer), ?? (CS First Boston), ?? (??), Chris Lippincot (??), John McManus (Needham & Co), ?? (Highland Capital), and Keith Dunn (Robertson Stevens). I was personally pleased to hear them mention that they have some excellent opportunities to do business with companies such as DMIC and PCMS "because these companies are starting to experience strong growth". [I have investments in both DMIC and PCMS; so this statement represents a nice independent corroboration of something I already know.] They said that they expect to file some amended forms with the SEC in the next few weeks which will present combined company results for prior quarters... this will give some perspective to the current quarter's results and to any estimates of the future performance. Rob