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Technology Stocks : THREE FIVE SYSTEM (TFS) - up from here? -- Ignore unavailable to you. Want to Upgrade?

To: jaspert who wrote (1302)	4/9/1998 4:51:00 PM
From: Noblesse Oblige	Read Replies (3) \| Respond to of 3247

To the "thread," Three-Five hit the consensus forecast earnings of $ .12 in quarter one, on just a touch under $ 18.5 million in sales. Management termed the result to be "right in line with expectations." Although it is prior to the conference call, which is scheduled to begin in approximately 20 minutes, significant items in the release are as follows: 1) Demand is expected to build dramatically over the balance of the year. 2) Profit margins were stronger, with operating margins coming in at a minor touch below 26%, much better than all of 1997. Undoubtedly, some of this gain has come from currency effects. 3) Second quarter expenses will rise slightly above trend, as the China capacity expansion has had to accelerate to accommodate what the management sees as accelerated sales growth in the second half of the year. 4) There appears to be some shifting of personnel from sales to research and development. Although the total of both is approximately what one would have expected, SG&A declined significantly in raw terms from quarter four, while R&D expenditures were up almost exactly the same amount. 5) The tax rate and various financial relationships are about the same as quarter four. Nothing of interest to report there. 6) Backlog is reported as $ 39.2 million versus $ 17.8 million at the same time in 1997. 7) The various technologies under development are moving along as per plan. The company expects to be announcing some production contracts in the near future. All in all, no surprises here other than the improvement in margins. If these margins can be "held" at this level throughout the year, it is quite possible that the company will report numbers in excess of the most optimistic "Street" estimates. As an aside, I am speaking to Mr. Raefon as I type this. He has indicated that based on the $ .12 earnings number, he is going to have to talk to the "birthday Gods" so that next year he will get more of a "present." For myself, however, I am not dissatisfied. Let us see what the conference call brings. I am off to points west for a short vacation following the call. I will attempt to post again this evening, but if I am unable to do so, most probably my next commentary will be made well after Monday's opening. Good luck to all.