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

To: Peter H. Mack who wrote (7744)	6/15/2000 8:50:00 PM
From: Czechsinthemail	Read Replies (3) \| Respond to of 9582

pete, The unused production capacity, which has been mentioned before, is of course a blessing, and is the very thing that we count on to achieve the quarterly 20% incremental gains that we have been experiencing and hope to see continue in the future. Alliance has adopted a fairly conservative development program. Many have faulted them for this, complaining that they have been behind the curve in developing new chip designs. But there is a historical basis for waiting to see clear signs of demand before plunging into major development projects. The investments in UMC and Chartered Semi have provided significant production capacity without the enormous capital costs of building fabs. The venture investments have flowered into investments in Broadcom, Vitesse and now PMCS. Overall, Alliance has been able to develop a diverse and multifaceted semiconductor program that will do extremely well during the boom times of the chip cycle and much better than most during a down time. I think we will see revenue growth above 20%. Some of this will come from a greater capacity utilization; some will come from more efficient production with higher yields; and some will come from more favorable pricing. Improvement of margins should translate into even better earnings growth. If we have the happy combination of a more favorable supply/demand relationship boosting chip prices with improved production efficiencies, Alliance will produce outstanding operating results. If, in addition to this, they are able to develop their new chip projects and bring them to market quickly, they will generate eye-popping results that will astound us all. And, from what I've been able to determine, they are generally ahead of schedule in their new product development. In terms of investment results, the most recent UMC windfall will be a hard act to follow. But ALSC has a portfolio of excellent companies and over time, these investments should do well. They will also provide a wonderful source of capital for ALSC to pursue acquisition or internal development. My guess, is that ALSC will end up buying out some of the venture companies and using them as purchased R&D in the tradition of Cisco. In the short turn, Alliance should do well because it is significantly undervalued relative to its assets and near term growth prospects. For those with a longer time horizon -- one extending out beyond the next semiconductor downturn -- Alliance should prove to be one of the best-performing companies in the semiconductor space.