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To: T L Comiskey who wrote (63059)	1/19/2000 11:45:00 AM
From: T L Comiskey	Read Replies (1) \| Respond to of 152472

QCOM inside.... Jan 19, 2000 SST Blows Out the Quarter Senior Analyst: Eric Singer (1/19/00) On Tuesday, Silicon Storage Technology (NASDAQ:SSTI - news) reported fourth quarter results ahead of expectations. Net revenue for the quarter totaled $48.3 million, an increase of 167% over the $18.1 million reported last year. Sequentially, revenue grew by over $13 million, or 38%. Operating profit for the quarter expanded to $5.4 million from $0.8 million in the immediately preceding quarter and a loss of $6.9 million reported in the same period last year. Net income per share was $0.21, $0.02 ahead of our estimates. For fiscal 1999, revenue grew to $124.8 million, up from $69.4 million in the same period last year. Net loss decreased to $4.0 million, or $0.17 per share, from $17.6 million, or $0.77 per share in fiscal 1998. Stabilizing flash memory prices, coupled with a well-executed product strategy resulted in a return to profitability in the third quarter of 1999 for SST. Over the past year, SST has introduced new product families and more than 30 new products that have been well received in the marketplace. Additionally, SST has expanded agreements with partners and entered into new technology licensing agreements with other collaborators. These agreements validate the benefits of the company's proprietary SuperFlash technology and provide a solid foundation for future growth. Gross margin for the fourth quarter totaled 30% and SST's operating margin totaled 11%. Over the next several quarters, we expect a SST to show substantial revenue growth and leverage its operating model to show expanded operating profitability. We are forecasting SST to expand its operating margin to 15% in the second quarter of 2000 and to over 20% in the fourth quarter. SST has secured sufficient manufacturing capacity to substantially grow its revenue. SST's balance sheet showed cash of $1.2 million, accounts receivable of $33 million and $29.7 million in inventories. Borrowings under a credit facility totaled $19.3 million. SST is in the early stages of tremendous growth, and the balance sheet is indicative of this. With additional borrowings under an existing credit facility and strong cash flows from operations, we are confident that SST has the financial wherewithal to execute its business plan. We expect SST to show strong sequential growth in revenue and earnings over the course of fiscal 2000. For the first quarter we are forecasting revenue of $51 million and earnings of $0.24 per share. With continued strong demand for flash memory and stable pricing, SST is well-positioned to continue to post positive earnings surprises over the course of fiscal 2000. Upside to estimates exists from SST's licensing agreements with Motorola (NYSE:MOT - news) and Qualcomm (NASDAQ:QCOM - news) . The timing and magnitude of revenue contribution from these deals is unclear, but clearly can be large and lucrative. While SST shares have had a spectacular run over the past few weeks, shares will continue to outperform the market. We reiterate our BUY rating.