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To: Judy who wrote (13646)	1/30/1998 6:22:00 PM
From: Zeev Hed	Respond to of 18056

Not too surprising, but I do not think that is the end of the swoon. Yet in early June you might be able to get into ANAD at around 10, and frankly, the SEA expansion if their wireless infrastructure is not finished, just on hold. However, as I have mentioned few time to Carl Rohman, the GaAs people are always in a race for new markets, since silicon is always creeping frmo behind with higher and higher frequencies and lower and lower critical figure (switching time, time energy dissipation per switch). Silicon will never catch GaAs in the "performance" race, but on the other hand, GaAs can never be as low a cost per chip as silicon either. That is why I think that GaAs will always be relegated to second fiddle in this market. Zeev

To: Judy who wrote (13646)	1/30/1998 7:03:00 PM
From: Nancy	Respond to of 18056

Judy, from Smart Money THE HORROR OF OWNING ANADIGICS WE ADMIT IT: We were wrong about Anadigics (ANAD). While the stocks that turn up in our daily screens aren't meant to carry the same weight as those recommended in SmartMoney magazine, we did like this maker of integrated circuits for wireless telephones when it turned up on a price-to-earnings-growth (PEG) screen back in December. Big mistake. The stock lost about 20% of its value shortly after we wrote about it, then pretty much clawed its way back -- until today. Anadigics's stock dropped 19 5/8 Friday to close at 14 3/16 -- a 58% loss. What happened? Yesterday after the market closed, the company announced its fourth-quarter and full-year results, which came in better than expected. But then the company dropped this bomb: "As we enter 1998, we are experiencing a substantial reduction in order and forecasts for orders from our wireless customers, which will result in significantly lower sales in the first quarter, and could result in a net loss for the period." The release went on to say that it now appears that the company's customers -- L.M. Ericsson (ERICY), Nokia (NOK/A) and Qualcomm (QCOM) -- "now have excess inventories of our products." So where did we go wrong? We liked this company because it had the top three makers of wireless telephone handsets as its customers. Plus, it makes integrated circuits -- power amplifiers for high-end wireless phones -- for all three major types of digital standards, such as PCS, code division multiple access (CDMA) and time division multiple access (TDMA). And its chips, made on gallium arsenide wafers, were supposed to offer an advantage over silicon-based chips; Anadigics's integrated circuits eat less power, throw off less heat and have greater clarity than other silicon chips. Since phones keep getting smaller and lighter, analysts reckoned these chips were the answer -- as opposed to cheaper, but lower-quality clusters of chips that perform the function of one Andadigics chip. Nice theory. Too bad it isn't true. While high-end digital wireless phone service demand is slower than expected (one word: Asia), that is not Anadigics's problem. "This isn't a demand issue," says Tim Kellis, an analyst with Adams, Harkness & Hill in Boston. "I think this is a company-specific quality problem." That quality problem appears to be so severe, says Kellis, that the company's customers seemed to have switched back to the lower quality "discrete" power amplifiers (in which several chips perform the functions of one). That's reason enough for Kellis to sell now. Sandy Harrison at Needham is less negative, calling the stock a Hold. He has slashed his 1998 earnings estimates from $1.26 a share to 63 cents a share; sales won't hit $140 million, as he originally estimated, but might now only reach $97.5 million. He thinks that Anadigics could straighten itself out within a quarter or two and has new products for the new dual band/dual mode wireless telephone, which is able to switch back and forth from analog to digital. Unfortunately, we have to agree with Kellis. While Anadigics may get a small dead-cat bounce over the next trading session or two, this stock isn't going anywhere for a while. It's a humbling lesson when you realize that Wall Street analysts -- four of whom downgraded the stock after the company's negative announcement -- aren't the only ones who can be wrong. -- By David Geracioti << SMI MARKET NEWS ARCHIVE