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

To: J.S. who wrote (29816)	2/22/1998 3:31:00 PM
From: John Rieman	Respond to of 50808

The improvement of gross margins actually adds to EPS more then the lower tax rate. The problem with VCD is the 20% price cut C-Cube made for this Q. They need to increase units from 3.5M units to 4.2M units just to break even on almost 1/2 of their business. I think it's possible/probable. Dec.- Jan. rate of run must have been around 1.5M units per month. In Q4, 1996, the total VCD chip market was 2.5M units. The next Q, 1st of 1997, total VCD chip sales exceeded 5M units. Of course, in May of 1997, everybody woke-up to a big inventory build up. This year, Chinese New Year was 10 days earlier, and the ramp-up started in August. Can it last through the end of March? Only the Chinese consumer can tell us. Divi revenues consist of settops and Headend systems. Settops are flat to lower because the the Kirch d-boxes. They added to both of the last two Qs, but can't sell anymore until the European Commission has finished with them in mid-May. Head-ends from Divi are a lumpy revenue source, and dependent on how quickly C-Cube bills them. With the slow-down expected in VCD units in Q2, I wouldn't be sending out Divi headend bills in March, if I could add them to Q2.