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Strategies & Market Trends : Gorilla and King Portfolio candidates - Moderated -- Ignore unavailable to you. Want to Upgrade?

To: tinkershaw who wrote (443)	12/1/2003 7:57:38 PM
From: Don Mosher	Read Replies (1) \| Respond to of 2955

Tinker, To bring you up to date on SCON, it may become profitable this quarter if it hits the high end of its projected revenues. Superconductor Technologies makes cryogenic front-end receivers using high temperature semiconducting technologies: a base station pass-band filter and low-noise amplifier to increase selectivity and sensivity to the signal, plus duplexers and amplifiers. To me, it seems to be sound and sophisticated science that is now being transformed into products, but remains a "shiney pebble" as a company. Nonetheless, I recently purchased it after seeing Andrew Seybold's column. STI has gone from small orders for spot solutions to 1000 unit orders from Alltell and general purchase agreements with VRZ, AWE, and Cingular, so the orders appear to be ramping up, with 9 trials underway. No value chain is in place since infrastructure providers, STI claims, want to put in more base stations rather than use their proven cost-effective solutions. A number of trials demonstrate that their solution reduces intermodular and other forms of interference as it largely eliminates thermal noise at the front-end of a cascade of components in a base station receiver. In turn, the reduction in interference, which is quite precise, increases capacity and coverage as it reduces blocked and dropped calls to improve quality of service. Once used, more sales are generated because it works, but it appears that it takes seeing it to believe it. The technology is applicable to all wireless modulations, but is expected to be particularly useful for 3G data. Their website is instructive. If you have sufficient interest, I would enjoy hearing how your modeling did in comparison to their current ramp up. Also, they bought Conductus, who was #2, and successfully defended a patent suit brought by #3 Isco. So, they have 80 to 95% of the installed units. Their small footprint, and reliable Sterling cooling system appear to be competitive advantages. But, mainly they appear to be ahead of the curve in a powerful science with many uses that can expand to many markets. The addressable RF market is large, and the potential markets are staggering. They did seek some more venture capital to expand their production facility, doubling capacity next year to about 5000 units. I have not attempted a financial analysis since I lack those skills. However, top line growth is impressive and the learning curve will take costs down and margins up. Don