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To: Jeff Bond who wrote (637)	12/23/1997 12:51:00 PM
From: Rick Verstay	Respond to of 886

Jeff I saw the H&Q upgrade on Micrel also. It is obvious from your comparisons that SMTC is a better value than MCRL. The market has continually given MCRL a premium stock price versus SMTC. Even when SMTC was trading around 70, I think MCRL was trading in 40s (MCRL did split 2 for 1 earlier this year). MCRL management does a much better job of selling their company to investment firms. Does this make them a more profitable company, I don't think so. I also read somewhere that insiders control like 40% of the stock which if it is true might tend to support the stock price. If insiders start to sell, WATCH OUT BELOW. The steep decline in SMTC's stock price is dishardening, but long term I think we have a gold mine and the next couple on quarters should confirm this. Merry XMAS and the best New Year to fellow SMTC followers. Thanks guys and gals for the great posts.

To: Jeff Bond who wrote (637)	12/23/1997 1:49:00 PM
From: Sword	Read Replies (1) \| Respond to of 886

Jeff: Great post and nice comparison. SMTC seems extremely undervalued and will likely appreciate significantly during the coming months. Merry Christmas to you and your family. Jerry

To: Jeff Bond who wrote (637)	12/23/1997 4:52:00 PM
From: Todd D. Wiener	Respond to of 886

LOL! That was a funny post, Bond. Jeff Bond. More comparisons b/w MCRL and SMTC: MCRL trades at 9x book value, while SMTC trades at 6x book value. MCRL's gross margins and R&D are each 400 basis points above SMTC's. That means that MCRL has the luxury of using higher gross profits to fund higher R&D. However, I don't believe that SMTC has to maintain the same level of R&D as does MCRL. According to MCRL's 10-Q, it is in the process of a big buying spree for new chip-equipment. MCRL's inventory levels are lower than SMTC's. MCRL's inventories account for 14% of total assets, while SMTC's inventories account for 27% of total assets. Much of the difference is related to MCRL's higher level of fixed assets, such as equipment. However, the quick ratio (current assets - inventory ö current liabilities) is higher for MCRL than SMTC (3.2 to 2.8), indicating that MCRL may have better inventory management. However, SMTC's higher inventories may be related to shorter lead times for products, and also Edge's higher inventory:sales ratio. MCRL's trailing price:operating cash flow (based on the first 9 months of this year) is 30x. SMTC's trading at 26x trailing 9 months operating cash flow. That's not a big difference, especially since MCRL is "projected" by analysts to grow at a faster pace. The reasons that MCRL's operating cash flows are higher than its reported net income is that inventories have been stable and MCRL has higher depreciation of fixed assets. Although I agree with H&Q that MCRL's selloff (actually equal to SMTC's from peak to trough) more than discounts any likely Asian problems. However, MCRL's valuation is only lower relative to its previously astronomical level. Being VERY conservative, I might say that MCRL is fairly valued at $30 and SMTC is fairly valued at $60. And although both stocks have been clobbered, they still trade at the same relative valuations that they did in September. Therefore, SMTC is still a much better value. In fact, SMTC hasn't been this cheap since it was in the mid-20s in April. The fact that H&Q upgraded MCRL may indicate that the coast is clear for MCRL (and perhaps SMTC), with regard to the Asian situation. MCRL will announce year end earnings in late January (I think), about 3-4 weeks before SMTC. We should have a better idea of how the quarter went for SMTC. If it was great for MCRL, it might have been great for SMTC. In the meantime, I've decided to set some mousetraps for SMTC (the mouse that has roared, and will roar again) in the mid-30s. I'm planning on buying more. Todd