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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Nancy who wrote (37558)	7/26/2002 10:37:00 AM
From: Johnny Canuck	Respond to of 68460

Listening to the ESST call now. One analyst seems a bit irate. He is questioning their assumptions on guidance. Say inventories are too high given current maturity of DVD products. Company saying Q2 inventories were too low. Increasing inventory as some other vendors have in the past been short. Have been able to pick up share as a result. Chip have a long life so not worried about being stuck with inventory. Analyst claiming pricing is in free fall. Expect chips to be less than $5 by Christmas. Company says they are not seeing the same thing. They have long term contracts. Expect 15 percent Y-Y decline with 10 percent of that coming in Q3 (next Q). Q4 is flat usually as once companies are in production they don't get any more discounts. Analyst question soundness of Apex, a major customer. Questions ESST exposure to company. ESST only sell if letters of credit are in place. Have zero exposure to Apex right now. Have lost some share at Apex, but still the largest supplier. Analyst claim ESST has been caught with bad assumptions about ASP's in the past. [Harry: Product transitions I talked about confirmed in call. Expect VCD GM to increase in the future reversing current fall as servos get integrated into the chip set. ASP of DVD chips will increase as more features added. The analyst didn't seem creditable. He seems a bit out of control. Don't recognize him specifically. Funny that he did not phrase his comments as a question. He just assume that management was wrong. Strongly suggested that management go back and talk to customers.] Another analyst asking about Q3. Why are other companies guiding significantly higher? Being conservative. ESST says other competitors may be selling into Japan. Japan builds to forecast, may get stuck with product in the channel as a result. Japan will build most product in Q3. Suggesting Q4 will be down for competitors. Q4 for ESST will be flat to Q3 for ESST. ESST customers build to demand. The demand is therefore spread out over the 2 Q's.