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Technology Stocks : Xicor ? -- Ignore unavailable to you. Want to Upgrade?

To: steve olivier who wrote (2715)	12/12/1999 1:35:00 AM
From: steve olivier	Respond to of 2920

Jeff, Since you seem to be preoccupied with comparing XICO to ATML, I thought you might like to see what one mutual fund manager has to say about ATML. As you can see the two companies are really not the same. Its amazing to think that 15 years ago XICO was larger than ATML. That is what they mean when they say its Management, Management, Management that counts. (metamarkets.com is the source) Atmel (ATML) Company Background Atmel (Advanced Technology for Memory and Logic) is a leader in the design, manufacturing, and marketing of advanced semiconductors. It is one of the few companies capable of integrating dense memory (storage of information), logic (processing of information), and analog functions on a single chip. Atmel chips are manufactured using the most advanced wafer processes, including BiCMOS, CMOS, and silicon germanium (SiGe) technologies. Atmel was founded in 1984 by CEO George Perlegos, a former design engineer for Intel. Why We Own It We admire Atmel not only for its leading-edge semiconductors, but also for the way the company expertly steers its business from less-attractive to more-attractive market segments. For instance, Atmel has moved away from memory and into logic chips, to the point where logic now comprises 80% of the company's revenues. This change in strategy was brought about the hard way, and the story demonstrates how Atmel management adroitly responds to adversity. At one time, Atmel's strength was producing memory chips. By 1996, non-volatile memory was in high demand, so profits at Atmel were soaring. But in 1997, the financial turmoil in Asia hit Atmel, along with other chipmakers, with a glut in the market and falling prices for its core technologies. Earnings plummeted and revenues fell $112 million from the previous year. The company implemented a rigorous restructuring program, including a 10% workforce reduction. Management broke up the company into five divisions that answer for profit and loss each quarter. It also refocused its product line towards more advanced technologies. Atmel has been able to make the transition in product line because of its advanced manufacturing techniques, such as its ability to integrate dense memory, logic, and analog functions on a single chip. Although Atmel has decreased its dependence on memory chips in favor of logic-based "program-on-a-chip," products it has not entirely abandoned the memory chip market. Its flash memory sales have recently been extremely strong. Atmel's high-density flash chips are used in such items as cell phones and handsets, while low-density flash chips are used in PCs and peripherals. Once it re-established itself on firmer financial footing, Atmel was able to make some key acquisitions. In March 1998, the company purchased Temic Semiconductors, a European chip maker previously owned by Daimler Benz. Temic brings a team of experienced design engineers, a technical sales force, and a greater presence in Europe to Atmel. The Temic acquisition has already paid off in the introduction of a new power amplifier for wireless handsets. This amplifier is the first to use a Temic-produced application made from silicon germanium, a semiconductor material that has all the advantages of silicon, but at a lower cost and with higher-frequency capability. Atmel also represents a play on the burgeoning smart-card market. Smart cards differ from credit cards by including an embedded micro-controller unit or memory chip. Atmel purchased Motorola's (NYSE: MOT)smart-card business in January of 1999, thus becoming the world's third-biggest supplier of smart cards, behind STMicroelectronics (STM) and Siemens. In addition, Atmel's high-end programmable smart-card technology have been combined with Wave Systems's (WAVX) e-commerce system to produce an all-purpose "safe" for transactions and the metering of any digital content. Finally, those Sony Playstation users among us (there are 43 million worldwide) will be interested to know that Sony's plans for challenging Nintendo's popular GameBoy depend heavily upon Atmel technology. Sony's PocketStation will allow users to download games from the PlayStation for play anywhere. PocketStation is based on an Atmel low-power single-chip system that includes an ARM processor, flash memory, RAM, an LCD controller, digital-to-analog converters for audio, and infrared communications capability.

To: steve olivier who wrote (2715)	12/12/1999 2:24:00 AM
From: jeffbas	Read Replies (1) \| Respond to of 2920

My comments on the Soundview numbers: messages.yahoo.com Based on my info the fab depreciation charges are about $1.9 M per quarter. That is 58% of the $3.3 M total per quarter, which is suggestive of perhaps a $17 M fab writedown charge. We then have to add severance and things like that, which still should not get you up to a $1.01 loss after an earnings credit. I expect any fab writedown to be preannounced shortly after yearend, unless they think they already have done that in the 10Q. As far as valuation relative to ATML goes, I do not assume that Xicor will not achieve the same level. The outside fabs have far more wafer start capacity than Milpitas. What if Xicor were to introduce products that were very well received - perhaps the $.25 DCP chip, or battery mgmt products, or whatever? What do you think would happen to the valuation relative to ATML if the market came to believe that the outside fabs significantly leveraged Xicor's small existing sales base. (We already know that the outside fabs will leverage Xicor's existing design capability, and that they are getting a lot of design wins.) I am very open-minded on this issue.