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Technology Stocks : Elbit Vision Systems EVSNF -- Ignore unavailable to you. Want to Upgrade?

To: Richard Spitzer who wrote (61)	1/13/1998 5:55:00 PM
From: Jimbo Cobb	Read Replies (1) \| Respond to of 93

From Individual Investor web site (SELL Rec): Elbit Vision Systems Ltd , an Israeli firm, makes automatic visual-inspection and quality-monitoring systems. Poor Q4 earnings preannounced; Sell (1/13) Management at Elbit Vision Systems has announced that they could not secure several contracts that should have followed the OTEMAS trade show in Japan. As a result, the company will fall short of our fourth-quarter earnings estimate of $0.15 per share. Even worse, the company will not beat its earnings of the previous year of $0.12 per share. Management has also stepped away from its formerly optimistic projections for 1998, now characterizing 1998 growth as likely to be "moderate." CEO Yossi Barath pinpointed the Far East's economic turmoil as the main problem for his company, which was expecting orders from Japan, Taiwan and India, all of which did not come through. (It is possible, but not certain, that some of these contracts will filter through to the first quarter.) Although Asian companies need his product, many are not secure enough at this time to invest the sums of money it takes to buy an ITEX machine. As a result of this uncertainty, earnings in 1998 will not grow as they have in past years. "They won't be 40%, but they won't be 5% either," said Barath in a telephone interview. Our former 1998 earnings estimate of $0.80 per share is now too high. Even if the company grows at 20-25% in 1998, Elbit would earn just $0.50 per share this year, and would deserves a P/E of 20, if the Street were kind. Furthermore, Elbit's newest product, which will target either the auto or the food industry (the company hasn't told us for sure), will be at least six months late. It was supposed to have been released at the end of 1997 but will not ship until the middle of the year at the earliest. Results like these are unacceptable, and to make matters worse, management has misled us in different ways, including leaking news of the Q4 shortfall last week, when the stock dropped from $11 per share down to $8 per share. It seems that management has been less than candid in many of our conversations with them, and we have just not seen a turn for the better. If and when that occurs, we'll let you know, but for now we recommend selling EVSNF and avoiding it until its vision returns. (Posted 1/12/98 with EVSNF trading at $7.13)