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Technology Stocks : Spectrian Co. (SPCT) -- Ignore unavailable to you. Want to Upgrade?

To: kahunabear who wrote (487)	10/22/1997 4:01:00 PM
From: Richard Tuck	Read Replies (1) \| Respond to of 738

Whipsaw, Jason, etc., Let's say that rumor is true. The only large customer SPCT has in Asia is LGIC which accounted for 18% of SPCT's business last quarter. LGIC ordered $8 million worth of single channel CDMA amplifiers in August for delivery in September (see 8/5/97 press release). It is possible that this batch had a high failure rate and thus the shipment was returned. This would likely have happened towards the end of the month after the optimistic statements at the PCS '97 show. After the initial drop in SPCT's price from 64 to 50, SPCT held the conference call and denied the rumors that LGIC had selected PWAV over SPCT for the 50W multicarrier amplifiers. SPCT also said that they were comfortable with meeting estimates. As we remarked at the time, this was a rather tepid statement compared to their earlier statements. Obviously, if SPCT had to eat the entire $8MM shipment, they would have to post a loss. If only, say, 10-20% were returned ("a shipment"), it would reduce their earnings by maybe $0.10/share. This could account for the difference between Garrettson's comments on 9/11 and the comments after the big drop. Another circumstantial piece of evidence is that SPCT mentioned that they couldn't make the amplifiers fast enough to keep up with demand. This situation often results in sloppy quality work. So what is the fallout if this situation actually happened? Probably very little for the future unless LGIC also decided to cut them off as a supplier. Actually, next quarter would be even better because SPCT would have to recognize the revenue from the replacement shipments then. Also, SPCT probably will be shipping a large number of amplifiers to Nortel for the next phase of the Sprint PCS buildout. Anybody have an opinion on this theory? Richard