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Technology Stocks : DSC Communications -- Ignore unavailable to you. Want to Upgrade?

To: Steve Fancy who wrote (4088)	4/25/1998 9:16:00 AM
From: Yeadon	Read Replies (1) \| Respond to of 4429

Part of the problem is that backlog is only about half of the sales in any Q. But I agree it does sound fishy. Even this Q, they say bookings are up nicely from Q4. But I think that their backlog is based on what is booked for the next two years, which makes things a bit fuzzy near term. In any case, they are not very credible to the Street. Take the Danish sub, which has not been profitable. First it was a clash of cultures after DSC took over. Then it was product delays with the AC1 and AC4. Then when they were ready it was lower than expected demand. Next it will be El Nino. The key problem this Q for the big loss, besides the drop off in business, is the failure to properly manage expenses. They are the same this Q as they were in Q4, yet they knew that rev always drops in Q1 yet still kept expenses high, which was bound to kill the bottom line anyhow. Part of expense problem this Q is likely Cellcore. I found out that when they bought Cellcore it only had about 10 million in rev, but they paid about $160 million for it, 16x sales, which is ridiculous for a company with no earnings. Compare that to Tellabs recent acquisition which is profitable, they paid a lot less in relation to sales, and it will contribute to their bottom line much earlier than Cellcore will (if ever) to DSC. That is why so many hate DSC management. Lastly, some of the whisper numbers for Q1 are minus 30c plus. Much worse than previously announced. Also look for bloated inventories. Yeadon