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Technology Stocks : IDTI - an IC Play on Growth Markets -- Ignore unavailable to you. Want to Upgrade?

To: Donald B. Fuller who wrote (8027)	4/24/1998 6:43:00 PM
From: 5,17,37,5,101,...	Read Replies (2) \| Respond to of 11555

I sold most of my position today at $13.62. Decided that I might be able to return at lower prices, maybe $12.50. Call me a flipflopper if you will. Jackson

To: Donald B. Fuller who wrote (8027)	4/24/1998 7:30:00 PM
From: Xianming Liu	Respond to of 11555

Don: You illustrate some points. But 4 million Winchip shipment in a year is perhaps too high. I thought 2-3 M winchip/year shipment was IDTI's goal. In addition, Len is only expecting to sell Winchip at around $55 each for the currently Q. Another risk we should consider is whether the low-end CPU market will take 3 M Winchip from IDTI in a year. Intel is currently sell 200 Mhz MMX Pentium for $95 each and 233 Mhz AMD K6 is currently priced at around $85 each. At the same clock rating, C6 is generally slower than Pentium MMX and K6. Sure, C6 is cheaper. As the absolute price difference becomes smaller, people tend to go with performance and better-known brand. Comparing the speed of production ramp-up for C6 with AMD's K6, we need to give IDTI some credits. But I sometimes really wished that the ramp up had started about 3 months earlier.

To: Donald B. Fuller who wrote (8027)	4/24/1998 8:16:00 PM
From: Tom Cannon	Respond to of 11555

4 million WINCHIPS in FY 99 might be on the high side. If they could sell 1 million I think it would be great. It's just going to take time for IDT to get rolling enough to show earnings in excess of $1.00/sh. I think most investors would be very happy to see earnings in the neighborhood of $0.50/sh for FY 99. If so a multiple of 40-50 might be appropriate. The 2nd quarter 99 report should give everyone a better idea. Until then the stock price will probably just move sideways.

To: Donald B. Fuller who wrote (8027)	4/25/1998 12:14:00 AM
From: Gordon Quickstad	Respond to of 11555

I'd be completely happy if you were only half right!

To: Donald B. Fuller who wrote (8027)	4/25/1998 1:49:00 PM
From: Rob S.	Read Replies (2) \| Respond to of 11555

Your estimates are on the long side of what's likely to happen. Len's estimate for production was for between 2.5 and 4 million parts being manufactured. That doesn't say that all of them will be sold in that time frame or that all the revenue would be collected. Even if IDTI does produce 4 million parts, they may not sell all of them, some of them may be used to build up in-process and finished goods inventory, and the normal lag in receivables may delay the accounting of revenues and earnings. I think IDTI may be able to make 4 million WinChips during the next 12 months but is more likely to come somewhere well bellow that. Given recent disappointments with their ramp on the C6, I would peg the number closer to the 2.5 million figure - say 3 million. Then I would discount for a build up in inventory and accounts receivables lag and bad debts and would suggest that revenues on 2 to 2.5 million over the next year is more realistic. I would also discount the calculation for sales and earnings: I think the market price for the C6 and C6+ at the speed grades they plan to offer will be driven down further. The $70 plug number is probably valid for a re-sale number for IDT's distributors but not for their revenue. I'd discount that number by about 15% to around $60. That gives you a gross margin of around 50% or around $30. This fits with statements made during the CC that gross margin of around 50% should be achievable. So sales of 2 mil to 2,500,000 X $60/ASP = $120 to $150 million added revenue. After tax gross profit of 33% (50% x.66) = $40 mil to $50 mil. Then there will be additional overhead to consider that may wipe out $10 to $30 millions - not all of this will likely come in the form of expenses but will come into the balance sheet in one way or the other. So that gives us an added net net of $10 million to $40 million over the next 12 months. Diluted: $10-$40,000,000/85,000,000 = about $0.12-0.50/share added income. I think that my numbers are closer to what analysts are predicting for earnings and sales growth over the next year. The thing with these numbers is that IDTI has tremendous leverage to make them come in either higher or lower. The ramp in production and sales, however, is unlikely to result in your numbers as quickly as suggested. 1999 may see the results of the momentum build and backlog of positive cash flows. First, IDTI needs to make things happen on the product and production front. Then that revenue stream needs to flow down to the bottom line - there is a 3-6 month lag in seeing that on the bottom line due to the cost strains of the enormous growth and normal business and accounting practices (inventory, hiring costs, promo & advertising expense, etc.).