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Technology Stocks : Genesis Microchip (GNSS) -- Ignore unavailable to you. Want to Upgrade?

To: Jacques Chitte who wrote (464)	10/22/1999 2:41:00 PM
From: Sultan	Respond to of 1277

One down graded to "neutral" and one other initiated coverage with "Buy". Both on the same day.. ANALysts...

To: Jacques Chitte who wrote (464)	10/22/1999 2:49:00 PM
From: James Sinclair	Read Replies (1) \| Respond to of 1277

One downgrade for Taiwan I can understand. But why the staged double downgrade? Doesn't make any sense to me. Maybe because they mentioned in the earnings announcement that they saw the earthquake effects spilling over into next quarter. Remember that you not only have to worry about the foundries that produce Genesis's chips, but also plants that make the LCD panels. Still, for a long term investor, this is like a day after Christmas sale. I'm just waiting to see where this bottoms out before adding to my positions.

To: Jacques Chitte who wrote (464)	10/22/1999 3:33:00 PM
From: Runomo™	Read Replies (1) \| Respond to of 1277

<<Is anyone privy to SSB comments accompanying the downgrades?>> Here are the comments which accompanied the initial downgrade. Yesterday comments are still not available at the SSB site. Note that the SSB analyst had the lowest street estimates, both quarterly and yearly, and seems to be the most bearish on GNSS. MO Wednesday, September 29, 1999 -------------------------------------------------------------------------------- --SUMMARY:--Genesis Microchip--Semiconductors Owing to likely supply troubles out of the company's two Taiwanese foundries, UMC and TSMC, Genesis will likely have modestly lower than expected revenues and earnings over the next two quarters.On the customer side, revenue shipments will be lost this quarter and next while a delay in the ramp of several new flat panel factories in Taiwan will also likely delay relief from the current panel shortage.Given the short and medium-term issues, we are trimming our September quarter EPS from $0.18 to $0.17, fiscal (March) 2000 from $0.77 to $0.65 and 2001 from $1.05 to $0.95.We are also reducing our rating from 1S (Strong Buy) to 2S (Attractive) and cutting our price target from $35 to $25 until we get a better idea of the full impact from the Taiwanese earthquake on Genesis' results. --EARNINGS PER SHARE-------------------------------------------------------- FYE 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year Actual 03/99 EPS $0.07A $0.09A $0.10A $0.12A $0.38A Previous 03/00 EPS $0.17A $0.18E $0.20E $0.22E $0.77E Current 03/00 EPS $0.17A $0.17E $0.15E $0.16E $0.65E Previous 03/01 EPS $0.24E $0.25E $0.27E $0.29E $1.05E Current 03/01 EPS $0.19E $0.22E $0.26E $0.28E $0.95E Previous 03/02 EPS $N/A $N/A $N/A $N/A $N/A Current 03/02 EPS $N/A $N/A $N/A $N/A $N/A Footnotes: --FUNDAMENTALS-------------------------------------------------------------- Current Rank........:2S Prior:1-S Price (9/28/99).....:$18.87 P/E Ratio 03/00.....:29.0x Target Price..:$25.00 Prior:35.00 P/E Ratio 03/01.....:19.9x Proj.5yr EPS Grth...:30.0% Return on Eqty 99...:N/A% Book Value/Shr(00)..:3.15 LT Debt-to-Capital(a)8.0% Dividend............:$N/A Revenue (00)........:67.10mil Yield...............:N/A% Shares Outstanding..:19.8mil Convertible.........:No Mkt. Capitalization.:373.6mil Hedge Clause(s).....: Comments............:(a) Data as of the most recently reported quarter. Comments............: --OPINION:------------------------------------------------------------------ Supply will likely be temporarily reduced. At the company's annual meeting yesterday, management revealed their concerns regarding timely supply of flat-panel display scaling chips from the company's two foundries, UMC and TSMC, where it gets substantially all of its supply. The supply shortfall, which will be clarified in the next several weeks, will likely result in flat shipments in the September quarter and low-single digit revenue growth in the December quarter. We earlier forecast about 6% revenue growth in each quarter. Nor do we figure the company will likely make up all of the shortfall in coming quarters. As a result, we cut fiscal 2000 revenues from $72.0 million (up 125%) to $67.1 million (up 110%) and $96.9 million (up 35%) to $88.7 million (up 32%). Though Genesis has sufficient inventories of Z-family scaling products (UMC), it is short the Bridge 120-series (TSMC), which integrates analog conversion with a digital scaler. In addition, the company is not able to ramp and ship for production new products, like the new scaler/receiver chip called the GMRZX1 and the new Z4, a scaler with frame rate conversion. Delay in producing these chips could also result in lost design wins. Demand growth also less clear due to earthquake. Given the disruption created by the earthquake, the company's customers have not been taking receipt of product in the last week, though the company expects that situation to improve in the next few weeks. Even so, damage to flat-panel display fabs will likely result in slower than expected ramp of several new Taiwanese flat-panel manufacturing facilities. Ramping these facilities is behind some analyst assumptions for a sharply accelerated revenue growth rate for the company next year. Competitive edge remains. Despite the uncertainties created by the earthquake in Taiwan, we believe Genesis remains the leader in image processors for flat panel displays with about 50% market share. The company is helping to secure its position by introducing a plethora of new products which should help insure its leadership position in coming years. Even so, the field continues to get more crowded, with Silicon Image, Sage, Arithmos, and other makers likely to increase competition going forward. This could result in continuing pressure on average prices, some of which is currently in our estimates. Though we forecast at least 60% unit growth for the company next year, a 25% decline is ASPs will likely result in only 36% revenue growth. ---------------------------------------------------------------------------- Salomon Smith Barney is a U.S. registered broker-dealer. It is a member of Citigroup Inc. and is affiliated with Citibank, N.A. arecommended, offered, sold by, or hel nd its subsidiaries and branches worldwide (collectively "Citibank"). Despite those affiliations, securities