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Technology Stocks : ACTM $100 Million Cable Modem Contract with MOT -- Ignore unavailable to you. Want to Upgrade?

To: kolo55 who wrote (299)	11/2/1997 3:44:00 PM
From: jeffbas	Read Replies (2) \| Respond to of 1250

< Do you know assumptions behind earnings estimates? > Not specifically. But this is how I would reproduce the numbers. - I believe they forecast 265-275 revenues for 1997 (see post 260) and a profitable fourth quarter. This is 60-70 million for Q4 vs. 62 million in Q3. They further stated that the 9 million should not be assumed to be additive in Q4. Therefore, I think .09 for Q4 is reasonable. - They apparently also expected return to 30% growth rate thereafter and a return to historical levels of profitability in 1998. I think the following numbers are reasonable - sales, eps, net margin Q4 68M .09 1.2% = First Call average eps estimate 1997 273 .77 2.6% Q1 75 .24 2.9 = First Call average eps estimate Q2 80 .35 4.0 Q3 85 .45 4.8 Q4 90 .49 5.0 1998 330 1.53 4.2 = First Call average eps estimate This is what I think the analysts are reasonably doing. I note that the 330 million is only up 21% from the 273 million of 1997. However, the fourth quarter would be up 32% from the year before, which I think would be the better measure. Your point is well taken about capacity increases supporting higher sales. The corollary is that with only the sales in the table they might not recover to the historical margins shown until 1999, because of the overhead associated with the underutilized capacity --> they will either make more or less than 1.53 average First Call estimate, but won't make the 1.53. Comments?