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Technology Stocks : SI Diamond Technology (SIDT) -- Ignore unavailable to you. Want to Upgrade?

To: John Curtis who wrote (522)	2/29/2000 6:12:00 PM
From: P. Ramamoorthy	Read Replies (1) \| Respond to of 623

John, Read more about SIDT (10Q, 10K, etc.), watched his PPT slide presentation at Cruttendon-Roth and called the company yesterday (Feb 28, 2000) for clarifications. The company President returned my call and clarified the following questions of mine. Comments: Recent 10Q talks about selling their domain name (diamond.com) for royalty payments (to generate cash for R&D). The royalties of $5MM from Canon sounded good. He acknowledged both moves as part of their effort to generate cash. (1) FEPET - The 4 inch monochrome prototype has 250 lines resolution, the highest in the industry. Going to color is not a problem since they can still get about 80 lines per color (=250/3, one for red, one for blue, one for green). Current displays have about 70 lines resolution. The FEPET technology has been demonstrated in the lab to the CRT Part manufacturers, not CRT manufacturers. CRT manufacturers are one step above the value chain. Next step is to convince the CRT manufacturers. It is a continuous process - discussion, testing, negotiations, etc. Can not predict when the commercial production will begin. If everything moves in the positive direction, the CRT part manufacturers may begin production in 2001. Their role is to provide the technology and sell the license to them. (2) Canon/Toshiba - royalty payment covers parts of SIDT's technology that will be used by Canon in making flat TV screens. Canon is not currently using SIDT's technology yet. Canon may go on their own way in the (flat TV screen) business. The flat panel display market is $40 Billion. SIDT tries to convince CRT manufacturers since their business is dying and they are looking for alternatives. SIDT technology is easy to produce commercially at the existing CRT factories and the flat panel can compete with LCD, LED or plasma displays well. Eller mentioned $12000 for the plasma screen whereas FEPET screens will cost slightly above the current CRT screens. Since FEPET screens can be produced at the existing CRT facilities, they will have much higher margin. (2) Electronic Board - The first display is going up next month at Eckerd's Tampa (?) headquarters for the Eckerd management to assess its value and function. SIDT won't know until May or so, whether Eckerd drug will proceed with this display. Eckerd has 3000 stores. A contract from Eckerd will be a major positive for SIDT. (By the time SIDT delivers boards to all 3000 Eckerd stores, we would have all retired - joke!) SIDT is not selling the Boards but leasing them and charging them for time. These Boards are controlled via internet, displaying messages and changing remotely. In the morning, it displays breakfast menu, lunch special at noon and dinner specials in the evening. They can change as the retail marketing demands. (3) Projected revenue in 2004 - $300-400 Million projected in 2004 includes all EBT, FEPET, etc. It represents a reasonable estimate (not too conservative, not too aggressive), allowing for other competing technologies to emerge before 2004. The 96% gross margin is true, since all of their income will be in the form of royalties, with very little Sales and General Expenses. Their patent position is very strong. They will continue to fund R&D. (4) Other competitors - Candescent technology will be very difficult to produce commercially. The company has been trying very hard with heavy financial backing from Compaq, H-P, etc. Commercial production costs for their technology will be too high. Foundries are very expensive to start, takes about $2Billion for installing a new foundry in USA. The margin is very low. Their technology may be too sophisticated for Malaysia, etc. Heard that Pixel went bankrupt. SIDT may have no competitors except Canon/Toshiba. SIDT thinks it can do well if it can get a small part of the $40 billion market. Since I did not take notes during my conversation, the above information may not be quite accurate. My comments - This background information explains why the stock price may drift around this level. The next major event is the Eckerd EB contract, expected around May-June time frame. If they add more businesses - fast food chains (like McDonald's, Burger King, Wendy's), signs at airports, highways, sports stadium, etc. - the EBT business by itself may be very lucrative. jmo Ram