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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Mannie who wrote (23105)	12/8/2000 1:42:52 PM
From: Mannie	Respond to of 65232

SSTI continued...from Individual Investor Most estimates call for desktop PC revenue increases in the mid to high-single-digit range in 2001. If these forecasts prove correct, SSTI would certainly see a dent in its growing PC Basic Input Output System (BIOS) business. SST has targeted this space as an important growth driver: During the most recent conference call, management indicated that SST has a 25% global market share, a number it hopes to expand to 50% in 2001. That would make SST the number-one producer worldwide. Intel's recent decision to discontinue in-house production of firmware hubs for its 800 line of chipsets could help SST achieve its aggressive growth targets. What's uncertain, however, is how much market-share gains can offset the weight of a more challenging desktop PC sales and pricing environment, and the effect on SST's ability to reach the management-guided earnings target of $2.90 a share for 2001. Can SST achieve its own earnings targets? Wall Street doesn't think so. The current consensus estimate, according to First Call, is $2.67 a share, a figure that doesn't even factor in the recent drastic slashing by Kaufman Bros., which went from $2.96 to $2.22 a share for 2001. Analysts at almost every high-profile brokerage covering the stock now publish estimates for next year that are below management's guidance. The exception is First Union, though by cutting his price target to $26, in line with the rest of the Street, analyst Bennett Notman may be signaling a lack of confidence in the outlook for 2001. One could make a valid argument that SST is a tremendous bargain at current levels based on its sought-after technology, healthy balance sheet, and solid prospects for long-term growth. However, we caution investors not to ignore the continued bearish tone of the market. The "fear of the unknown" has gripped the financial industry and kept large institutions from stepping in and putting price floors under quality companies like SST and others in the technology sector generally and the semiconductor industry specifically. A wise investor once said, "It's important not only to pick stocks that should go up, but also to pick stocks that will go up." All of the seemingly positive fundamentals and attractive valuation ratios in the world aren't going to help the investor who is looking at the way things are instead of the way things will be. SSTI's multiple of five times next year's earnings sure is eye-catching. But the Street isn't stupid; it's evaluating stocks based on market conditions anticipated for six to twelve months from now. So that low p/e ratio isn't evidence of a screaming buy, it's a sign that the market either doesn't believe the earnings upon which the ratio is based can be achieved, that it doesn't believe the earnings are sustainable, or both. Until sentiment toward the group improves, which would require dramatic and convincing evidence that the semiconductor cycle is back in an upswing, or until SST's management reiterates specific guidance that can instill investor confidence in the firm's sales and earnings forecasts, we will maintain our "sell" rating on SSTI.

To: Mannie who wrote (23105)	12/8/2000 1:49:50 PM
From: im a survivor	Respond to of 65232

Thanks....there's always some downside. As far as ssti goes, I still think they are positioned nicely. They have already been sufficiently whacked with all the others to much lower valuations. I also recall that they said they were booked full capacity thru 2001...in fact, they stated their biggest problem may be actually meeting customer demand and they were looking to increase capacity. So, even with a slow down, I still see ssti as doing pretty well the next couple years. JMOOC Keith