Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Vari-L (VARL) -- Ignore unavailable to you. Want to Upgrade?

To: FIFO_kid2 who wrote (665)	3/26/1998 10:29:00 AM
From: JakeStraw	Read Replies (1) \| Respond to of 2702

????I just saw a quote on Yahoo of $3 on only 2,900 shares traded???

To: FIFO_kid2 who wrote (665)	4/13/1998 1:54:00 AM
From: Gregory DeMoully	Read Replies (1) \| Respond to of 2702

JJB, I have recently spent a couple more hours studying up on VARL. Some points I keep coming back to: First, there has been a lot of talk about how we were raped by the private placement last year, that VARL management can not be trusted to provide shareholder value, that there is excessive insider selling, etc, etc, etc. I look at it this way: At the time of the private placement VARL was confronted with two good business opportunities that required an immediate capital infusion, namely the need to automate the Denver facilities and the need to move forward with the China JV. Although the private placement was made way below market, this is now water under the dam. As for the insider selling, this is just part of the insider compensation. The insiders get more shares all the time and compared with the volume of new share grants, the sales are insignificant. Second, VARL has demonstrated they can easily dominate a market. VARL now dominates the European market for cellular (digital and analog) base station equipment which they targeted: increasing their market share from 20% in 1995 to 75% in 1997. Sales to domestic cellular infrastructure providers has shown good growth as well, increasing by over 50 percent between 1996 and 1997. Third, VARL is not a one product company. In 1997 VARL generated 1.4MM in revenues for Fiber-Optic Components. The Lucent deal is worth an estimated 10MM, and is just beginning to kick in. Fourth, the new low power (1.2 Volt) patented VCO has given VARL a toe hold in the giant market for cellular (PCS) handsets and pager components. This is a market in which VARL presently doesn't generate any significant revenue. Positive indicators are: 1) VARL has already landed one contract to provide the low power VCO to a pager manufacturer, and 2) VARL is adding a new automated assembly line in Denver specifically for the low power VCO, and probably would not make such an investment unless they thought they could sell a lot of low power VCO's. Negative indicators are: 1) The success of the China JV is very questionable, and even with the new assembly line in Denver, VARL's cost structure is too high to compete with the low-price, low-end VCO providers such as Panasonic. In summary, what is the future for VARL? 1) VARL has pretty much shown they can grow the business 30 percent per year, year in, year out, 2) VARL has carved out a solid niche as the manufacturer of choice for the highest quality wireless components, 3) There are a lot of new applications for wireless in which VARL could participate if they choose, LMDS, low earth orbit satellites, wireless local loop, just to name a few, and 4) VARL is not going out of business any time soon. I know this stock is probably the most frustrating investment I have ever had. But maybe there is an opportunity here. Consider the market on Thursday: 6000 measly shares traded. This is a sleeper. I can't help but think that there is some kind of value hiding here, especially if the China Deal can some how be done, but short term you just can't predict. Good luck whatever you decide.