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

To: Suresh who wrote (1377)	4/13/1998 10:49:00 PM
From: Sam Nizam	Respond to of 4710

VTSS CEO will be on CNBC Squawk Box tomorrow morning.

To: Suresh who wrote (1377)	4/13/1998 11:58:00 PM
From: The Ox	Read Replies (2) \| Respond to of 4710

Thanks Suresh for the updated access #. Notes from CC Revs for year up 61% eps now .57 compared to .37 this time last year. Even with Taxes doubled (rate now 20%) eps growth yr over yr at 54% gross margins 60.2% up from last year Strong growth in each focus Telcom 19.6MMrevs, Datacom9.5MM, ATE 11.1M - customers submit designs VTSS doesn't have to do the engineering Bookings up 14% from last quarter! and up 72% from last year's 2nd qtr 39.4 Million shares used to calculate eps cash down 6 million to pay off Colo Springs fixed assets Inventory turns at 4.8 Last week of quarter generated 1.1MM from new fab. 5 to 7 million revenues anticipated from new fab in the next qtr's report, won't know until last week of qtr where they will be Still have concerns about consistant yields from new process, but all things considered they are very happy about progress. Hope to have 6 to 10 products qualified at new plant by end of the current quarter. Sampled 8 new products, 7 in communications (2.5 gigabit sonic transmitter, best of bunch - chip will replace an entire card) New ATE chip replaces 8 current chips at more then 50% saving in cost to customer but increases VTSS profit substantially Sampled first CMOS chip-700Ktransitors. 1 gigabyte per second(16 channels 500 megabits per secondl) for integrating Quad P6 processors together, speed up to 800Megabyte per second so far. For those customers who don't need the high end that GaAs provides. No major revenues expected from the CMOS process until 1999, less then 1 million expected this year. The difference between Telecom and Datacom communications are almost totally disappearing. Datacom seeing explosive growth over last 2 years. Didn't really want to discuss what they were doing at the new plant. Have used both technologies in new plant. Worked on 4 different products in all 3 areas ATE, TC,DC. LU, SLB over 10% Alcatel, Ericcson, Ciena, Selectron, primetech other customers mentioned. "they were getting beat over the head to supply new products" ATML lawsuit does not concern management due to the nature of each of their 2 companies. ATML can't document what technology VTSS is accused of taking. Sounds more like sour grapes, since charges are generic. VTSS has filed a countersuit since they are convinced that ATML is hiding internal problems by blaming VTSS with this suit. Gross Margins expected to stay flat for next qtr or 2, then once new fab is running at 50 to 60% capacity then they expect Margins to grow. They are "wafered out" every week (sounds excellent!) They don't see SiGe as a major threat for their types of products due to the outstanding preformance of GaAs. They think it's more for Cellular phone amplifiers and the lower end of the GaAs spectrum. Recommended all competitors to spend as much as possible on SiGe so they could waste their resources. SONET/OC48 projections for the component market at 700-800MM for year 2000-1, Growth at system level at 25% a year VTSS continues to win new customers as they combine more components in each new chip. 12-18 months from samples to real production in Telecom segment of business. Long cycles. Which hinders the competition from entering the market. Datacom cycles are much shorter, often 2 or 3 months. Improvement in yields might be able to increase Camarillo facility production by a few %. Don't expect major growth from the old fab. Ciena's problems haven't effected their demand for VTSS's chips. Hope these notes help, any error is unintentional, not intended as investment advice. Do your own homework and research. Michael