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Technology Stocks : Vitesse Semiconductor -- Ignore unavailable to you. Want to Upgrade?

To: slob who wrote (1249)	3/4/1998 6:35:00 PM
From: JWA	Respond to of 4710

Smartmoney Interactive lists vtss as one of 5 possible "home run" stocks. Of course Smartmoney Magazine has been behind vtss for over 2 years. JWA

To: slob who wrote (1249)	3/5/1998 11:08:00 AM
From: gda	Read Replies (2) \| Respond to of 4710

Vitesse valuation, more thoughts slob, " If you know of any companies that fall below a PE of 30 than please tell me because I've got lots of free cash that's looking for a home. " Check out: XLNX (P/E = 27) ALTR (P/E = 27) LSI (P/E = 20) You are looking at VTSS in 3-4 years during an up cycle (see below) "VTSS is NOT in the PC industry and its diverse customer base makes it very difficult to impact them by attacking 1 or 2 products. If you have a strategy for attacking VTSS than I'd be glad to hear more about it " I agree with that and I do not have a plan to "attack" VTSS. Vitesse will continue to prosper for a few more years at least. The argument is about valuation not whether Vitesse is going to crumble. " If VTSS maintains its growth rate and profitability its market cap in 2002 will be between $3.5B and $6.0B." You are making a mighty speculative statement here. How many companies in the Semi Industry do you know that were able to maintain such a growth rate? Remember that Vitess is a niche company with a limited TAM and growing pressure by CMOS from below (the frequency spectrum). It will be very difficult for it to maintain a growth rate >10% once it gets to $300M. The trouble with your statement is that you refuse to accept that the company is already overvalued. Its current cap is simply speculative and any bit of bad news is going to send it into a spiral dive. I am sure you know the Semiconductor Industry Cycle Paradigm. Every few years the industry is hit by overcapacity, and P/E's drop to <20. Right now we are at a peak cycle. Watch out for the drop. Thats when the speculative valuations are hit hard. Check out biz.yahoo.com "You seem to think that growth and margins will come under a lot of pressure making my rosy picture smell slightly rank. I'll accept this IF you can show me any evidence that its happening." Yes, well. The OC12 products fro example are going from ASP of >$30 for the VSC8110 to less than $25 for the new VSC8113 with <20 likely before the end of the year. The OC48 products were planned at $300 per set and by the time Vitesse completes the development of the new generation (VSC8162) prices are expeted to drop below $100. The GBit Ethernet parts (VSC7135) are already below $12 and are expected to drop below $7 by next year, with competition from .25u CMOS. Sad but true. Good luck, slob. I remain short. gda