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Technology Stocks : VLSI Technology - Waiting for good news from NASDAQ !!! -- Ignore unavailable to you. Want to Upgrade?

To: emichael who wrote (3302)	4/16/1998 1:00:00 AM
From: DanZ	Read Replies (2) \| Respond to of 6565

VLSI didn't trade on Instinet after the earnings came out but it did trade at 20 1/2 and 20 3/4 after the close and before the earnings came out. I was talking to somebody who has access to Instinet after the earnings came out and he told me that there were a few offers at 20 1/2 and then 20 1/4 but no bids and the stock didn't trade. It was pretty thin though; he told me that only 38 people were "on the box", meaning watching VLSI on Instinet. I'm not sure if this means the stock was halted or if there just weren't any bids. It could be that people were digesting the press release or waiting for the conference call before putting any bids in. This stock could go either way tomorrow. On one hand, they severely missed even the lowest estimate. First Call had a range of 10 to 17 cents with a mean of 11 cents. But on the other hand, the company had a lot of positive things to say about the rest of the year and this quarter's number isn't really very relevant. I noticed in the income statement that the company's gross profit margin increased over the same quarter last year while R&D spending as a percentage of sales increased a few percentage points. G&A was down in absolute dollars which tells me that the company knew sales were lagging and they quickly reacted by trimming corporate expenses. I don't think this should be taken lightly because VLSI isn't exactly a small company and it seems to me that management should be commended for reducing G&A expenses that quickly. They easily could have lost money this quarter if they hadn't reacted so fast. I also don't mind that they increased R&D expenses because it portends better technology in the future. My feeling is the stock will probably be down on the open as people react to the bottom but it is liable to rally when investors realize that the worst is probably over in terms of sequentially down earnings. There is a reason why the stock has been holding support over the past couple of weeks and there must be a reason why it was up sharply today on heavy volume. Small orders didn't move the stock up 1 1/2 today. It was big buyers and I have to believe that the stock will continue it's rally soon. Dan