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To: jeffbas who wrote (300)	11/3/1997 10:45:00 AM
From: rich evans	Respond to of 1250

Jeff, I think your post sets forth accurately the scenario being used based on the conference call and cautious outlook/estimates based on the suprises we received. A more optimistic view but not necessarily more accurate could be: Pino was being very cautious with estimates based on legal considerations, poor visability evidenced by their statement about being "shocked" so if they go back to orginally projected run rates their may be a better Q4 then they would say. I would say 275 mill min. Also the margin question going forward should rebound faster IMO. The reduction discussed was 7-8%. 4% was materials cost due to mix changes. But it was indicated that this was fault of customer and they would be returning inventory for credit. 1% was underutilized labor which should not be there for Q4. 3% was factory fixed overhead which was charged in Q3 due to reduced shipment problem. So I expect a faster snapback. The tax rate is unclear to me but these gross margins if improved should reflect better than the First Call estimates IMO. Next year based on the poor visability indicated is a guess but I am guessing at least 10% more than your figures as to sales and earnings. But I think a trier of fact would vote with you with his mind but hope springs eternal. Rich

To: jeffbas who wrote (300)	11/4/1997 1:48:00 AM
From: kolo55	Respond to of 1250

Agree that the earnings could vary considerably from estimate. I tend to think the chance that margins recover faster is more than 50%, say 60-70% chance of higher porfits, and only 30-40% chance of weaker profits. The average margin of 4.2% you used for 98 is quite low compared to the industry, especially for companies with Networkers as customers. Also even using your numbers, stocks trade looking ahead, and you have the company earning a run rate of $2.00 by the 4th Q. I expect to see 15-18 times forward earnings, so I expect 35-40 by the end of 1998 ( I think the analysts next fall will be assuming at least 15-20% more growth for 1999). The current price looks awfully attractive to me. I am surprised we didn't get more of a bounce today, given the strong market and the end of a lot of mutual fund tax selling. I still expect to sell 19-20 range in several weeks, then level to January, before we see a long upward move. Thank for you reply and your analysis, and thanks to you too Rich Evans. Paul