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Technology Stocks : CRUS, good buy? -- Ignore unavailable to you. Want to Upgrade?

To: Sjp who wrote (5095)	2/20/1998 12:26:00 AM
From: Schiz	Respond to of 8193

My input on the current crus situation fwiw. 1. The whole tech industry has taken a beating since the whole asia thing. 2. The biggest revenue generator for crus (mass storage) has taken a major beating. 3. From what I remember(correct me if I'm wrong) crus went through a restructuring in 96 and had a couple of profitable quarters only to disappoint heavily in the fourth quarter of fiscal 97. Since that disappointing quarter they have had three positive quarters. That brings us to the same situation we were at last year at this time. Things look like good but will this quarter be good or will they disapoint us like last year? 4. Mr Teo has bought a rather large chunk. It seemed that he drove the original drive to 17+ but I thought there was a second surge to about the same area after he was done buying(not sure though). If I was really concerned about Mr Teo's intentions, I'd look into his past investments and see what kind of influence he had there and if he did exact changes in the company if he had any help from institutions. If he did (have help from institutions) I would compare the institutional holders (that worked with him in the past) to the institutions that currently hold large amounts of crus. If I get real bored I may look into this some day but right now I look at the whole teo thing as someone with alot of money (and very possibly good long term investment savvy) has bought a large chunk. It's definitely not a bat thing but I wouldn't buy the stock just because of him. 5. Market cap is less than yearly sales. Yearly revenue peaked somewhere over 1Billionk, I don't even know what it is today but it is definitely less than a billion. When going through a restructuring and selling off UNPROFITABLE divisions, it is not neccesarily the best to look at earnings growth. Although if you forgot about the times previoius to the last few quarters, they went from a big loss to ~.04 to ~.13 to ~.18. If they continue on this pace they'll be making 1.00 a share in a few more quarters. 6. They have alot of cash. I thought there were a few more things I wanted to say (I haven't posted in a while) but I can't think of them now. The post is probably too long as it is though. To sum up , I think that the whole industry that crus is in (semi & dd) has been hurting and that is the main reason why they are down (the fact that they had a design loss in the dd sector I'm sure isn't helping either). If you go back to the second quarter, there were alot of downward revisions on their earnings estimates. Some people beleived at that time that crus was leading the analysts lowere so they could beat the estimates, wich they did. There was a class action lawsuit against crus (I'm pretty sure they lost) so perhaps they are a little more conservative now then they were in the past (when talking to analysts). I'm hoping (bad thing to do with stocks) that the major downward revision in earnings estimates was due to crus leading the analysts to the worst possible scenario and that there is a good chance that they will beat the estimates and they will once again be revised close to what they were before the last earnings announcement. Don't forget there was a large increase in earnings estimates after the previous quarters earnings announcement. As a last resort there is always a possibility of a buyout. What is a company with close to a billion in revenue worth? Don't forget all the patents that they own and have applied for. Bottom line is the downward risk is not really that much when you compare it to the upside potential. I highly doubt we will see much lower than we are now but even if if it really does take a crap, how low can it go 5$? Obviously it could go to zero, so say the downside potential is 0, you could lose almost 11$ a share. What's the upside? If we are going to be so drastic as to say the downside is zero, we have to be just as drastic with the upside and say it could hit 35$ by jan99. Realistically I think if they beat current estimates this quarter (even if only by a penny) they will be in the low teens by summer(providing no bad news like another design loss in mass storage). If mgmnt is correct about the potential of the next generation read channels then 20+ by the end of the year is very possible. P.S. Yahoo chat boards. I check them out once in a while. Sometimes there is a little different perspective there which can be nice but the thing I really don't like is there are a lot more meaningless posts proclaiming a buyout etc. Some of these can be rather humorous but that's about it. Also alot of personal attacks, almost reminds me of the esst board on si I used to watch before I joined si. I apologize for all the spelling errors but I don't have the time (or the desire) to fix them now.