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Technology Stocks : C-Cube -- Ignore unavailable to you. Want to Upgrade?

To: Tech Investor who wrote (27326)	12/31/1997 2:13:00 PM
From: Rutgers	Respond to of 50808

CFO's Comments as Reported at the End of November C-Cube Shares Tumble; China Sales, Technical Downgrade Cited Dow Jones Online News, Wednesday, November 26, 1997 at 18:48 By Janet Morrissey Staff Reporter NEW YORK -(Dow Jones)- Shares of C-Cube Microsystems Inc. fell 13% Wednesday as Wall Street appeared to respond to concerns about sales in China, an analyst's technical downgrade and a Sony Corp. unit's planned introduction of a new encoder device. The shares (CUBE) closed down $3, or 13%, at $20 on Nasdaq volume of 2.8 million, compared with average daily volume of 1.3 million. The Milpitas, Calif. maker of video decoder chips relies on the Far East for 40% to 45% of its total revenue, and analysts think the company might therefore be more susceptible to the ups and downs of the Chinese economy than other semiconductor companies. Concerns are currently reverberating through the investment community about lower-than-anticipated sales of consumer electronics in China this quarter and a price war heating up in that country on digital video chip technology. "Consumer electronics sales have not taken off the way they were expected," said C.E. Unterberg Towbin analyst Tejinder Singh. But he said it's too early to tell if the sluggishness will continue through the selling period leading up to China's New Year in February, which is traditionally the country's strongest sales season, Another analyst, Steven Frenkel of Paragon Capital Corp., said he, too, heard talk of a price war heating up in China, but he concurred that it's premature to project its impact, if any, on C-Cube's financial results for the fourth quarter. One analyst, Ken Tower of UST Securities Corp., downgraded C-Cube to sell from hold based solely on the supply-demand ratio for the company's stock. It reflects technical chart analysis, not company fundamentals, Tower said. The analyst said the adjustment was made after the company's share price began falling after climbing steadily to 31 in August. Since that time, the stock has fluctuated - reaching as high as $35 in October and dropping to as low as $19.75 Wednesday. Fueling investor concerns further was Sony Semiconductor's (SNE) recent news that it plans to introduce its first single chip encoder - the CXD1922 - in the first quarter, which would compete with C-Cube technology. C-Cube Chief Financial Officer John Hagedorn agreed the sales and pricing concerns in China as well as the technical downgrade were probably responsible for the stock's decline. But Hagedorn dismissed suggestions that Sony's new chip could pose a competitive threat to his company's product. "Most customers (for the chip) are competitors of Sony," he said, "and I can't see Panasonic and Toshiba buying from their competitors." Hagedorn said he has not yet noticed any unexpected sales declines in China. He said October sales were on track and he said it's too soon to project C-Cube's total sales for the fourth quarter. Although Hagedorn acknowledged price declines in the current quarter, he said he remains comfortable with analysts estimates. A consensus of six analysts surveyed by First Call estimate C-Cube's fourth-quarter earnings at 28 cents a share. Copyright (c) 1997 Dow Jones & Company, Inc. All Rights Reserved.