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Technology Stocks : Anadigics(ANAD) - Is anyone following this Company? -- Ignore unavailable to you. Want to Upgrade?

To: Larry Garrison who wrote (322)	1/31/1998 9:44:00 AM
From: SemiBull	Respond to of 1079

<<You have got to wonder how much all this equipment and "furniture" is going to be worth in 2-3 years in these high-tech businesses where technologies change so fast.>> << Jan 30, 1998 (6:15 PM ET) - The Motley Fool Evening News <<Gallium arsenide integrated circuit company Anadigics (Nasdaq:ANAD - news) was crushed for a $19 9/16 loss to $14 1/4 after reporting earnings and issuing guidance for the coming year. Q4 EPS of $0.30 beat estimates of $0.27, but the real story is in the forecast for 1998. The company said, "As we enter 1998, however, we are experiencing a substantial reduction in orders 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." Analysts were expecting the company's per-share earnings to be flat sequentially in the first quarter, but this came as an ugly surprise. Goldman Sachs dropped the stock from its "recommended list" and said wireless revenues will fall 50% sequentially. Anadigics cited customer delays in ramping up production of dual-band PCS/cellular phones, a decrease in demand for phones containing Anadigics chips, and the Asian slowdown as causes of the inventory backup that is hurting revenue visibility for the coming year. >> I would assume that the present day value of semiconductor "equipment" is quite relevant in reducing costs and improvings margins in the near term....so whatever its resale value 3-4 years out is probably not the most relevant question facing ANAD. Demand, oversupply or SEA may however be. Just one man's spin....SemiBull

To: Larry Garrison who wrote (322)	1/31/1998 10:12:00 AM
From: Richard H.	Read Replies (1) \| Respond to of 1079

I just listened to the conference call replay. CEO said its a variety of issues, not one thing. Some of the problem areas discussed by management: 1. Back end packaging problems. Various things like bent leads, bonding and packaging problems. Not a yield issue, back end stuff. Nontheless, company had to scrap finished goods. Later CEO said some customers were concerned about manufacturing and quality issues. Editorial comment: Maybe this why customers are seeking second sources of supply? 2. Asia financial crisis is a contributing factor, but not the real issue. 3. 1st Q wireless PA volume is forecast to be about 1/2 of Q4 levels. CEO said Company had about 15% of the market in 1997, will drop in Q1. Said ANAD is declining faster than the market. Many issues: Reduction of orders, competitive solutions, product life cycles ending, slower ramp up to next generation. Will cut factory production to about 60% down from 80-90% utilization. This will let customers work down inventory. In a follow up question, CEO said Company will now delay the opening of the new Fab until 1999. 4. Major wireless trends. 3 volt PA and Dual Band platform. On the plus side, CATV products are doing well. ANAD is encouraged by the activity on this side of the business. See General Instrument announcement. On your comments, marketable securities are certainly not their own stock. I think many analysts were caught by surprise, it seemed that no "guidance" was provided by the Company. I'm quite sure management was aware of these issues and maybe could have handled this better. The street sure did not like the way this was handled! Maybe this could have been anticipated? Competitor TQNT disappointed in Q3, that stock was also crushed, although not all at once because they tried to give guidance. Dropped from the 40's to the high teens, only now rebounding. Now ANAD disappoints. I think ANAD will also come back in a quarter or so. Value players will soon take positions, performance will rebound by mid year and the stock will respond. While yesterday was a major disappointment for ANAD investors, today is an opportunity for those who were interested, but always thought the stock was too expensive.