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Technology Stocks : LTX Corp. (LTXX) -- Ignore unavailable to you. Want to Upgrade?

To: Logain Ablar who wrote (1835)	11/22/1999 12:49:00 PM
From: John Miz	Read Replies (2) \| Respond to of 2126

Gruntal post earnings analysis... Industry: Semiconductors & Electronics Intermediate Rating: 1 – Outperformer Target Price: $27 from $25 Long Term Rating: 1 – Outperformer Target Price: $38 from $35 Suitability: Aggressive Risk Reiterate 1-1 Investment rating: Raising estimates and price targets Revenue, earnings & orders were better than expected. Strong shipment and an increase in backlog hitting a record level of $125 million as visibility improves. The company gained three new customers for Fusion. LTXX has now penetrated 8 out of the 20 top worldwide semiconductor suppliers. Follow on orders from Fusion customers are 4-to-5 times higher than initial orders. Average selling prices (ASPs) are rising as customers select expanded options. The company is increasing its manufacturing while moving aggressively to meet expanded delivery schedules. We are increasing our EPS estimate for fiscal 2000 to $0.60 from $0.55 and our fiscal 2001 to $0.90 from $0.85 and fiscal 2002 to $1.25 from $1.10. Summary and Investment Opinion: LTXX reported its fiscal 1Q00 of $0.11, fully taxed that was ahead of our estimate and the Street's expectation. Results were driven by strong acceptance of the company's Fusion system. Fusion is gaining strong momentum with the top semiconductor suppliers worldwide. Follow on orders for Fusion are a clear endorsement supporting the power of LTXX's new platform. The company is aggressively expanding its output to meet customer demand and at the same time it continues to improve its gross and operating margins. We are encouraged by LTXX's success and believe that the company will be able to leverage its performance and capitalize on the upturn of the semiconductor industry. We reiterate our 1-1 investment rating. Key Points: Revenue for the quarter was $60.0 million, an increase of 12% sequentially, and ahead of our expectation. Strength continues to be broad based across all regions with particular strength in Japan. Gross margin for the quarter was 39.6% versus 38.4% last quarter and 26.5% year over year. Management reiterated its guidance of 45% gross margin within the next 4-to-5 quarters. We believe margin improvements are likely as higher volumes of Fusion, cost reductions and a higher product mix come into play. Orders for the quarter were $68 million above our $60 million expectation. Orders were up slightly sequentially and twice the amount year over year. LTX did receive follow-on orders besides new business in the aggregate amount. Total business with its top-5 Fusion customers is almost four times the amount placed with initial orders. In fact, initial orders for these top-5 suppliers was approximately $20 million, and now exceeds $75 million. Book-to-bill for the quarter was comfortably above parity with no turns during the quarter. Average selling prices (ASPs) continue to increase sequentially as customers are requesting a richer mix of options, plus the more frequent use in parallel test. Moving forward, LTX is already booked for its current quarter with visibility now extending into May. The company added three new customers during the quarter, which is consistent with its business strategy. LTX has added 11 new customers of Fusion since February 1999. One of the wins was with Linear Technology (LLTC-NASDAQ-Not Rated-$78.63). The other two wins, LTX did not disclose the customer, but on is a leader in high-speed communications, and the other came from an existing customer for digital. Additionally, LTX's partnership with Ando is progressing as it delivered three Fusion testers during the quarter compared to one in fiscal 4Q99. LTX now has created an impressive list encompassing 8 of the top 20 merchant IC producers worldwide. LTX increased production capacity during the quarter as Fusion units shipped increased 33%. Pins delivered also were up 37% and the company tripled its offering in mixed signal content delivered. Additionally, the company is changing how it manufactures Fusion to some degree by integrated test versus assembly/test. This is allowing for added capacity in its Westwood facility coupled with its outsourcing program. Operating expenses remain well managed. Operating expenses as a percentage of revenue were 27% during the quarter versus 29% last quarter and 51% year over year. Cash increased by $74 million as a result of the its successful secondary in October. Additionally, the growth in receivables nearly doubled year over year, but this was consistent with the revenue growth for the same time period. Valuation & Price Target: Our intermediate price target of $27 is derived by applying a multiple consistent with LTX's peak P/E relative to the last industry upturn in 1995 relative to the S&P index. In 1995, LTX traded at a 12% premium to the S&P 500 multiple. Currently, LTX is trading at a 23% discount to the S&P 500 based on our calendar 2001 EPS estimate of $0.98. If we apply LTX's 12% premium to the current S&P multiple of 26x it will imply a 29.0 multiple. Based on our estimate of $0.98, this implies a price target of about $27. Furthermore, we believe there is a potential for strong price appreciation since the company is well positioned to capitalize on the industry recovery with new leading-edge products, improved cost structure, operating practices, and follow-on orders.

To: Logain Ablar who wrote (1835)	11/22/1999 6:11:00 PM
From: Duane L. Olson	Respond to of 2126

Tim, Yeah, guess we can wait a bit... but Geez, didn't that look a lot like a buying opportunity when "somebody" moved out of the stock this morning -- I've never understood some of the big holders. When the stock has just been trading as high as 21, and prospects look fabulous, how can they justify dumping at prices under 18?!! Baffling. I do note that the stock is much too strong to be held very long at lower levels, however. We had that weak period in July, and we heard a lot of disgruntled folks who wished later they had held... They say you can't go broke taking a profit...but sometimes you can leave a lot of money on the table, seems to me. tso