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To: Yakov Lurye who wrote (1480)	3/10/1998 7:42:00 PM
From: abcde_98	Respond to of 2946

Hold on for now - the book value is $18.06 and co has ~ $190million in cash. I suggested SVG expand its product portfolio (seemed silly but). Does anyone know of any US semi co. trading below it's book value? Also, should that ever happen, a co. is likely to be taken over and acquirer's generally pay a prmium to BV -- historically, the premium averages ~ 40% which would put SVG in the $23 area. That's my 2 cents for now along with don't follow the herd since things are usually overdone by a herd and, like mean-reversion, things tend back to their average.

To: Yakov Lurye who wrote (1480)	3/10/1998 8:07:00 PM
From: LLCF	Respond to of 2946

< but the lame excuse they'd used combined with continued claims about expanding production capacity makes me very uncomfortable with this company's management.> "Mr. T" has been less than upfront for quite a while now. I'm sure he could have told us this news at the last conference call and he didn't. I wouldnt be surprised if in reality they havent produced enough steppers (ie. ramp up is behind schedule) and they are using the Bongdu (or whatever that order was) cancellation to to scale back expectations. Hence the statement about increasing capacity... since that would still make sense of course. This guy is only hurting the company... they way he was acting you'd think he wanted the stock down. DAK

To: Yakov Lurye who wrote (1480)	3/11/1998 2:45:00 AM
From: Yakov Lurye	Read Replies (4) \| Respond to of 2946

[Re: managing analysts expectations] A 25% shortfall in earnings (roughly, $3M after taxes) vs. the previous quarter was not completely unexpected. The company had previously reported a reduction in new bookings (175M vs. 207M for the previous quarter) and an exclusion of about $38M in previously recorded Asian orders. For the lithography division, last 10-Q stated that as of Dec.31, 1997 the company had firm orders for 47 MS with questionable orders for additional 27MS not included in the backlog. Most likely, they can not force Intel or IBM to accept MS shipments ahead of schedule and did not achieve much progress on most of the 27 MS out of schedule. If this quarter orders are no better than previous quarter orders (which in itself is not very surprising), the production rate of 15 Micrascans per quarter achieved in the end of 1997 is unsustainable. Even a small reduction in output to 13MS/q would reduce revenues roughly by $10M (at $5M per MS). With 40% margins, this is lost $4M in earnings before taxes. This would account for a major portion of the now predicted $3M after-taxes earnings decrease. The question arises, why did analysts ignore the reduced backlog and left the earnings estimates at the previous quarter levels (even slightly higher - 39c vs. 37c) My guess is that analysts would not do it unless somehow assured by management that progress is being made in securing some of the "lost" Asian orders. This agrees with the latest story about counting on Asian orders outside the backlog. IMO, a rather irresponsible approach on the part of the management. Looks like SVGI is still unable to secure market for their MS product outside the selected list of "preferred" customers that currently account for 74% of their sales. The stock price is now close to book value, but drastic capacity expansion with limited customer base is a risky strategy. Of course, the "If you build it, they'll come" approach works well in the movies, but somehow I don't feel too inspired. Y.