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

To: john Kurisko who wrote (28951)	1/29/1998 10:10:00 PM
From: John Rieman	Read Replies (3) \| Respond to of 50808

DVD was only 4% of Cube's revenues in Q4. It takes more than a year for design wins to translate to revenues. Cube is dependent on VCD sales. 15% of that market is turning into 10% of the market. The Lunar New Year is early this year. It pushed some VCD sales into Q4. And VCD chip prices are still declining. Declining revenues for the next 2Qs. Kirch is on hold through May and their partners have the option of opting out of their agreements. Cube could have been the sole decoder suppier for the 3rd largest TV market in the world. Now we don't know until May. Settop revenues will be slightly lower next Q. Encoder prices are dropping with the introduction of DVx. New products are coming, because of the lower price, but none will ship until late this year. PerfecTV/ Canal Plus, are past the holidays. Revenue drop. Divi's encoding systems are growing, over the next two Qs. DVD-ROM doesn't take off until we have Windows 98. The DOJ may delay that. On the bright side, C-Cube will pay less taxes for the year. Last year, it would have been worth $.05 per share. Margins on DVx are huge. It costs about $70 to make today. Cube can only make $.60+ esp, over the next 2Qs, and in the current environment, it is uncertain. Convergence is about Video over a network. Gates is pushing pipes that can download a movie in 2 minutes. That's the pipe digital video needs. Don't plan on your C-Cube shares going up much until late in the year. We could get a runup during the second and thrid week of Feb from product/partner announcements. But Cube's upside from earnings is limited, near term. .