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Technology Stocks : Elamex(ELAMF) -- Ignore unavailable to you. Want to Upgrade?

To: David Seltzer who wrote (195)	4/29/1998 3:39:00 PM
From: kolo55	Read Replies (2) \| Respond to of 276

Brief notes from the conference call. I think the conference call was the most downbeat of the last several calls I've listened to. Each call in the past, they spent a lot of time going through new customer programs that they expected to start in the next quarter or so. Most of these new programs have been delayed, or never materialized. This time, they spent a lot of time talking about their sales efforts, and had their new VP of Sales, Susan Muchos(sp?) on the call. Its almost as though they are going backwards, hopefully it doesn't get any worse than this. They have 7 sales reps now (if I heard this correctly) and are using this expanded sales force to focus on attracting US OEMs considering Mexico manufacturing for the first time. They are seeing increased interest from some OEMs, to counteract increased competition from Asia. They expect to capture two of these programs in the current Q. In the MarQ they felt the impact of the loss of one of their largest customers (16% of sales according to a previous conference call), who took their business back to Asia. The product they were making was intended for the Asian market. Meanwhile, the large electronics and avionics programs they announced in previous quarters were pushed out. So Elamex saw a sequential decline in revenues from last quarter. They got hit with the annual pay raise in December, so earnings suffered, particularly with the peso/$ exchange rate holding steady. These are the reasons for the lower earnings. They did have some encouraging words about Optimag, the new acquisition. Optimag is moving toward the first application of their inspection technique this fall. On acquisitions first discussed last fall, one fell through, and on another, their best offer bid was rejected. Of the two acquisitions discussed last Q, one fell through, and the other is in the final stages, but not sure it will close. They are continuing to look for acquisitions. For next Q, they should see some rebound in sales, and the 3rd/4th quarters should show revenue growth over last year, but not the kind of growth this company has seen in the past. Only two analysts asked questions on the call. My comments: Bottom line is probably 10% growth over the next 12 months. This company is still having trouble growing in one of the hottest ECM markets in the world. I'm frustrated, but holding. Maybe things can't get worse than this. And given that the company should earn 80 cents over the next 12 months, the stock is trading at a low PE. Paul