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Pastimes : ASK Vendit Off Topic Questions -- Ignore unavailable to you. Want to Upgrade?

To: Vendit™ who wrote (17340)	12/20/2000 8:11:32 AM
From: avanti77	Read Replies (2) \| Respond to of 19374

Every piece of our economy depends on and is actually enslaved to the price of energy. The only solution to inflation and recession is a drop in the price of a barrel of oil. Not to mention the price of natural gas - which has gone through the roof here in CA. It's a very serious problem that's making itself felt at the worst possible time. Real estate prices are at an all time high, with many of these new home buyers feeling the squeeze of high monthly mortgage bills plus unthinkable energy costs to heat those homes -- just as silicon valley and broadband bay are slowing down and laying off employees.

To: Vendit™ who wrote (17340)	12/20/2000 8:14:34 AM
From: Perry Ganz	Read Replies (1) \| Respond to of 19374

Oil Help is on the way George W and Dick Cheny Get your drill and head to Alaska Just the mention of it will continue to drive down the price of oil Last year at this time I was scared by the high valuations this year I am really getting optimistic Tax cuts Lower rates more reasonable valuations If you listen to CNBC you would think the food lines are already forming Wall of worry we have climbed before is being built Also could you give me your TA read on PXLW I like this area chips for digital tv and LCD moniters 263% yoy revenue growth I was in a best buy the other day and their Digital TV room was as big as the regular tv room Here is a report from jonathan joseph from SSB if anyone is interested ( he was the first to call the downturn in the chip industry this summer ) Happy Holidays Perry October 18, 2000 SUMMARY * Pixelworks reported third (September) quarter cash EPS SEMICONDUCTORS of $0.06 (versus a loss of $0.17) on revenues of $15.3 Jonathan Joseph million (up 26% qoq, up 256% yoy). EPS were above our and consensus estimate of $0.03, while revenues exceeded our forecast of $13.9 million. Edward Sun * Backlog was up 50% from the second quarter, as demand for Pixelworks image processors well exceeded the company's ability to supply. Though wafer support from Dunham Winoto foundry partner Toshiba is improving, the company expects to remain capacity constrained into the first quarter of next year. * Given the strong demand trends and improving supply outlook, we're raising our Q4 EPS estimate from $0.04 to $0.06, 2000 from $0.12 to $0.17, and 2001 from $0.27 to $0.30. We're also raising our price target from $36 to $50, which reflects a 16x price-to-sales multiple on our 2001 revenue forecast of $90.6 million. FUNDAMENTALS P/E (12/00E) 237.5x P/E (12/01E) 134.6x TEV/EBITDA (12/00E) NA TEV/EBITDA (12/01E) NA Book Value/Share (12/00E) $2.89 Price/Book Value 14.0x Dividend/Yield (12/00E) NA/NA Revenue (12/00E) $51.6 mil. Proj. Long-Term EPS Growth 25% ROE (12/00E) 1.8% Long-Term Debt to Capital(a) NA PXLW is in the Russell 2000(R) Index. (a) Data as of most recent quarter SHARE DATA RECOMMENDATION Price (10/17/00) $40.38 Current Rating 1H 52-Week Range $48.50-$10.89 Prior Rating 1H Shares Outstanding(a) 35.8 mil. Current Target Price $50.00 Convertible No Previous Target Price $36.00 EARNINGS PER SHARE FY ends 1Q 2Q 3Q 4Q Full Year 12/99A Actual ($0.16)A ($0.23)A ($0.17)A ($0.17)A ($0.72)A 12/00E Current ($0.08)A $0.03A $0.06A $0.06E $0.17E Previous ($0.08)A $0.03A $0.03E $0.04E $0.12E 12/01E Current $0.05E $0.07E $0.08E $0.10E $0.30E Previous $0.05E $0.07E $0.07E $0.08E $0.27E 12/02E Current NA NA NA NA NA Previous NA NA NA NA NA First Call Consensus EPS: 12/00E $0.13; 12/01E $0.30; 12/02E NA EXCELLENT Q3 RESULTS After the market close yesterday, the company announced an outstanding quarter with cash earnings per share of $0.06 (versus a loss of $0.17) on revenues of $15.3 million (vs. $4.3 million). Revenues were up 256% year over year and up 26% sequentially. We had been forecasting cash EPS of $0.03 (which was also consensus) on revenues of $13.9 million. Gross margin increased 260 bp over the previous quarter, while R&D increased slightly but was more than offset by a decline in selling expenses. The net result was a 0.9% operating margin, the company's first quarter of positive operating results. Pixelworks attributed improvements in margins to better product mix with higher ASP as well as greater unit shipments during the quarter. In addition, bookings remained strong, with backlog increasing 50% over Q2. Most of the backlog is shippable within 90 days. FOUNDRY SUPPLY IMPROVING, BUT STILL NOT ENOUGH With demand for the company's products currently outpacing supply, it seem clear to us that the company could have done even better if it was able to attain more foundry capacity. While Toshiba, which is the company's sole foundry, has done an outstanding job providing upsides in capacity, Pixelworks was still unable to keep up with the red-hot demand for the company's products. This supply constraint is expected to last through the first quarter of next year. The primary drivers of the demand are: * The flat panel display market has reached a critical mass of 5% penetration, and if history is any indication, this is the point where most consumer good shipments accelerate (witness B&W and color TV). * Investments over the past year in LCD panel capacity continue to bring a greater supply of panels to the market. As a result, 15" flat panel monitors are currently selling for less than $1,000, and should drop to less than $800 by year end, which would stimulate additional demand. The company is actively looking to improve the supply constraints in several ways. First, new products, such as the low-end entry codenamed "Crouton" will be manufactured alternative foundries, such as TSMC. The Crouton will be the company's first foray into the entry-level flat panel monitor segment, and has already begun sampling to customers. In addition, we suspect the company may bring on a third foundry partner over the next 12 months, such as Infineon# (IFX, $46.18, 1H). Finally, we would expect that the current trend toward loosening foundry capacity should benefit Pixelworks over the next several months. PRODUCT ROADMAP SOLIDIFIES AND CUSTOMER RELATIONSHIPS GEL The company recently announced a partnership with Analog Devices (ADI, $67.25, 1H), which should bring ADI's industry-leading converter technology into the Pixelworks portfolio. By mid-2001, Pixelworks will integrate ADI's converter technology into its single chip solutions, providing customers with what will likely be an industry-leading system solution. Though the exact financial details of the agreement were not disclosed, Pixelworks will pay ADI a royalty for access to the technology. With ADI's converters, which were the most frequently selected parts for flat panel monitors, we believe Pixelworks will have some of the most compelling products on the market, potentially combining a dual interface (DVI and A/D conversion), microprocessor, DSP logic, memory, and video processing. In addition, Pixelworks continues to hone its relationships with important OEMs. Epson, one of the company's first customers, is still the largest customer representing about 14% of sales, though it is expected to decrease as a percent of sales to less than 10% in coming quarters. Meanwhile, several other important OEMs such as Dell, Compaq, Samsung, and Sony are rapidly ramping Pixelworks-based monitors, and several should represent 5-10% of revenues over the next few quarters. Dell, in fact, has even agreed to have the "Powered by Pixelworks" moniker flash across the screen, which should help Pixelworks continue to build its brand image. In terms of product segment, flat panel monitors are expected to account for 45% of the company's sales by the second half of 2001, up from about 33% in the last quarter. CHANGES TO MODEL We are raising our estimate for fourth (December) quarter cash EPS from $0.04 to $0.06, and revenues from $16.0 million to $17.1 million. The increase in EPS comes from both higher revenues and slightly higher gross margins. For the next fiscal year, we are increasing our cash EPS estimates from $0.27 to $0.30 primarily due to higher revenues of $90.6 million (up 75.5%), up from $84.8 million (up 72.5%). Our new 2001 EPS estimate also reflects a greater tax rate of 27%, above our previous estimate of 22.3%. Finally, we are raising our price target for PXLW from $36 to $50, which represents a 16x price-to-sales multiple on our new 2001 revenue estimate.

To: Vendit™ who wrote (17340)	12/20/2000 10:22:40 AM
From: Walkingshadow	Respond to of 19374

Reid, << Oil is the key >> Yes. But I think it would be a mistake to say that if only OPEC would increase supply and the price of crude come down, that the problem would be solved. It would not. For one thing, the price of crude is just one component in the inflationary pressure of increasing oil prices. Another, perhaps just as important, is the price of refining that crude. I don't have figures at my fingertips, but very little increase in refining capacity has occurred in a long time, and refineries more or less operate at peak capacity, 24/7, and have done so for years. Worse, there's very little industry incentive to increase capacity, which would only tend to lower prices, beneficial for us, much less so for big oil. So, our attention is kept focused on Those Bad Guys in the Black Hats: OPEC. Now, they're no saints, of course, but it's just misleading to say they cause the problem. But even if the price of crude dropped in half today, this would have only a small beneficial effect, since the cost of refining that crude would not change. Another point here well worth keeping in mind is that there are other energy-related inflationary pressures relatively independent of the oil markets, for example natural gas prices going into what looks like a very cold winter, and the highly manipulated but always exorbitant price of electricity, as Donna has correctly pointed out, and the rest of us living here in the Land of Fruits and Nuts will readily testify to. << People sometimes fail to understand that energy in the form of higher gasoline prices effect freight costs which in turn raises the price of a delivered product to the end consumer. >> Every product is primarily diesel in the form of contributions from trucks, trains, ships, generators, and so forth not just to the delivery, but to the manufacturing process, and also to the process which results in a manufacturing facility even being built.These also contribute to the cost of each component in the end product also in a major way. Ours is not so much a Digital Economy as a Diesel Economy. IMHO, your statement simply cannot be overemphasized for this reason. So, my contribution to public service: energy in the form of higher gasoline prices effect freight costs which in turn raises the price of a delivered product to the end consumer. Energy in the form of higher gasoline prices effect freight costs which in turn raises the price of a delivered product to the end consumer. Energy in the form of higher gasoline prices effect freight costs which in turn raises the price of a delivered product to the end consumer. Terry P.S. Energy in the form of higher gasoline prices effect freight costs which in turn raises the price of a delivered product to the end consumer.