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Technology Stocks : IDTI - an IC Play on Growth Markets -- Ignore unavailable to you. Want to Upgrade?

To: Charlie Tuna who wrote (7201)	3/5/1998 4:38:00 PM
From: Rob S.	Respond to of 11555

That could happen. However, uPs are still one of the highest gross margin products in the world. Intel may ONLY be making 55% margin on them. what keeps AMD and Cyrix from making a lot of money on uPs is they can't find the recipe for manufacturing them at sufficient yields to pay the burden of their overheads and fixed costs. IDTI will make ~50% gross margin selling the parts at low ASPs. Being the low cost supplier, they can go do battle on the price front and may still make higher margins than is typical for most other semi products. The name of the game in semis has and always will be having high demand products that you can produce for less money than you can sell them. If that margin erodes to only 20% or 30% for IDTI, it could be at the point of break-even for AMD and NSM/Cyrix and possibly for Intel. That's the advantage of designing for and being the low cost manufacturer - something that IDTI has been repeatedly trained for with their other products. That's not to say that IDTI's stock price is not vulnerable. If people grow to expect a rosy scenario for ASPs and the reality turns ugly, then the price will move down. I think that th ecurrent 12 month price targets for IDTI are reasonable (16-18) given what is known about product plans and production ramps. The recent talk about a 30 price for the stock is out of line with what we know at this time but could become reasonable if several things fall into place. That's a lot of ifs and we won't find all of the answers for several months.