Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : THREE FIVE SYSTEM (TFS) - up from here? -- Ignore unavailable to you. Want to Upgrade?

To: dfloydr who wrote (823)	1/22/1998 1:34:00 PM
From: dfloydr	Read Replies (1) \| Respond to of 3247

I did manage to dial in to the TFS management conference call yesterday. Very interesting proceedure. Management was very, very good and candid. Thought my notes ... transcribed as written ... might be of interesting. (CORRECTIONS AND ELABORATIONS WELCOME) It lasted an hour and was very, very, encouraging. They see continued revenue growth in the next several years of 30% with earnings growing better than that. MAture programs have been throwing off good yields. SG&A stayed flat and so is down as a %, likewise R&D, so those two together are almost to their management goal of 10%. $30mm of cash and credits in hand. They have apparently won some big contracts from several customers which will be keeping them busy and which will start to ship in the second half of 1998. Interestingly, they have been trying to generate business with other customers so as to reduce their exposure to Motorola, but Motorola has just given them some major orders which will boost Motorola back up to 50% of their revenue - from 35% - in the year ahead - in spite of the fact that the rest of their business is growing too. Growth plans and orders require more mfg space. Their new plant in China is going well and should be in operation by October. That effort is headed by Dwight Nordstrom, ex-G.E. - 12 yers in chinese production, fluent Mandarin - plant is going in just N. of Beijing (which has 100 universities?) They produce the technical stuff here and will ship it to China for assembly and delivery to customers whose assembly plants are in China and who must show a high percentage of local content in order to operate in China. Thus they get cheaper assembly, better customer relations and protect their technology all in one move. Product Diversification: basic business under attack from other competitors on price basis, ergo migrating to new technologies with higher custom design content. LCiD: modest shipments starting in 2Q98, ramping up through the year. Should become a core technology. LCoS: 3 major clients considering, working with samples, etc.. 4 majors negotiating for access to samples. First half growing - at rates below last year - second half very strong - some new seasonality to the business - clients obsoleting items more rapidly and many aiming at year end targets. Capacity of present plant: depending on mix of business, could do $160 to 180 mm and they are going to be neding taht and more. Capital spending 98: China: land, building and equip, $6mm, Phillipines adding $5mm, PHX adding $3mm., Depreciation up about $1mm. Micro displays? is there a cost savings? Yes, present display engines cost about $1,000+ and a micro display would cost about $100 and have lower power req with better resolution. No debt, so how come you show a negative number, was that interest? No a small losson our cash at the Phillipine location. Present displays: to date shipped between 25mm and 30 mm and they have not come back. Inventory blip upwards? Already gone, seasonal. Credit worries? No. Every one of our customers is a "World 500" company and all are domestic US based. Now they may not be able to sell what they make, but they wil be paying us. Why so secret about your customers? Frankly we were thrilled when ATCross just allowed us to use their name as did IBM recently. Generally we are silent on this because our customers require it. (ATCross product will look like a leather bound yellow pad, but what is written can then be transcribed in ASCII code to a computer. Great for a salesman writing up an order.) You seem to be the sole source for some customers? Is that not dangerous? Yes, but we are sole source at first becasue we are the only supplier. In time customers will second source critical parts, but we will always be sole source as long as we are on the leading edge of technologies. For example, expect us to be the sole source in the micro display world for some time. All of this from hurried notes and not guaranteed to slice bread, jump over tall buildings or otherwise do anything useful. Floyd