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Technology Stocks : The New Qualcomm - a S&P500 company -- Ignore unavailable to you. Want to Upgrade?

To: slacker711 who wrote (4843)	1/5/2000 12:55:00 PM
From: Ruffian	Respond to of 13582

Sawtek Sees More Growth Ahead in 2000 By Brian Graney (TMF Panic) January 5, 2000 Being in the right place at the right time can do wonders for a company's market valuation, as surface acoustic wave (SAW) electronic components maker Sawtek (Nasdaq: SAWS) has discovered over the past year. The willingness of investors to put their money in anything having to do with the white-hot, rapidly growing wireless communications industry led many to Sawtek's doorstep in 1999, turning the company's stock into a seven-bagger. Last night, the company looked to keep the upward run going by saying its fiscal Q1 results will come in ahead of analysts' expectations. Net sales for the quarter are set to come in at $31.8 million, up about 12% from the $28.5 million recorded in the previous quarter. The firm said gross margins are holding up well and will top last year's 55%, leading to EPS of $0.23. That's slightly ahead of the First Call mean estimate of $0.21, but not a huge upward surprise by any stretch of the imagination. Perhaps unimpressed, traders reacted by dumping Sawtek's stock for a roughly 5% loss this morning. Most of Sawtek's vault skyward in the past 12 months can be chalked up to four letters: CDMA, which stands for code division multiple access. The wireless communication technology standard developed by the nosebleed stock that every market guru worth his salt loves to hate, Qualcomm (Nasdaq: QCOM), has led to a 180-degree reassessment of Sawtek's potential. Since a big part of the company's business revolves around supplying intermediate frequency (IF) filters for CDMA handsets and base stations, it was not a shocker to see Sawtek swept up along with Qualcomm last year when the CDMA craze infected investors like the 1918 Spanish Influenza. According to Sawtek, its CDMA filters continued to march right out the factory door in the most recent quarter. Also encouraging was the company's radio frequency (RF) filters for CDMA handsets, which racked up $2.4 million in sales in their first quarter on the market. Shipments of SAW-based IF filters for Global System for Mobile communications (GSM) phones are set to begin in the current quarter. Other new products in the works include SAW-based RF filters for GSM and TDMA (time division multiple access) applications and SAW duplexer filters. The new products will need to gain quick acceptance if Sawtek is to have any chance of meeting Wall Street's earnings expectations for fiscal 2000. In the current year, analysts are forecasting 25% year-over-year EPS growth, up from the 18% growth turned in last year. To get there, the company will need to hold the line on margins and ramp up sequential revenue growth from the average 7% rate seen last year. Starting Q1 with 12% sequential revenue growth is definitely a good start. With today's slight pullback, Sawtek is trading at 75 times analysts' fiscal 2000 earnings estimates of $0.90 per share. That's a lot to live up to for a company that has only grown earnings at a 14% compounded average annual rate over the past three years. Then again, at least Sawtek has earnings, which is more than a lot of its fellow wireless high-flyers from last year can say. If the company can find a way to eke out higher margins somehow (such as through leaner manufacturing) and the CDMA fever persists, then continuing 1999's stellar run with further gains in 2000 should not be all that difficult for Sawtek.

To: slacker711 who wrote (4843)	1/5/2000 1:08:00 PM
From: gdichaz	Read Replies (3) \| Respond to of 13582

slacker711: Scarcer than hen's teeth seems to be the best description of "news" of CDMA in China. Well, maybe not. Once in awhile a little info filters out. As always the problem is that MII is still there run by the old guard making it difficult for the leadership to move with any speed or volume. And of course, the Europeans have there feet solidly on the brakes re CDMA in China. Would be fun to watch - if that were really possible. But guess we have to read the tea leaves as best we can. Or at least try to figure out what is going on from the brief glimpses we get. Must admit that as long as the entrenched old guard has complete control of the Ministry expect that each step forward on CDMA is likely to be pushed back - at least a bit. Wonder if anyone here has access to any accurate source for a real look at this in some breadth and depth. In the meantime......... Best. Chaz PS Perhaps the best place to search is "news" re CDMA from Korea, since the "leadership" [????] of China and Korea seem to be "in agreement" [????] on need for CDMA roll out in China.