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

To: srvhap who wrote (8280)	5/8/1998 1:47:00 PM
From: Rob S.	Read Replies (1) \| Respond to of 11555

<- what is your sensitive point?> I hope I understand your question. IDTI, as many have recognized, has traded in a range between 9 and 16 for quite a while. That sets some resistance levels for the stock price - better seen doing TA. Then there are the earnings projections. When the stock starts trading near 16, it reaches fair valuation and analysts price targets on forward looking earnings, discounting FUD factors. In other words, it is vulnerable to a number of things that could throw more risk into the rosy equation. But when the stock reaches down toward the 10-11 level, a lot of the risk associated with the longer-term assumptions is factored into the price and it has less of a chance of moving down further. The other aspect (I assume) of your question is how I feel about the company itself and the decisions of management. Its good to keep that mostly separate from what happens over the short-term to the stock price. IDTI is still a small fish in a large pond with a lot of very aggressive fish swimming around it. I think management has made mostly the right decisions in the past year or so. We could try to criticize the details of those decisions but then none of us were party to the discussions or negotiations with other companies and don't fully understand what IDTI management had to deal with. Although I don't understand why IDTI hasn't been able to ramp up production more sharply, the efforts are being made in the right direction. Some shortfall in production goes back to the timing of earlier decisions; building the Oregon fab at a time when SRAM prices collapsed and the semi market turned down. Then scaling back the build out of the fab to conserve capital resources. The Oregon facility is expected to turn a net profit by next quarter. Past is past. I think that management is doing most things right given the current situation. The pricing environment is very competitive but that should not have come as a surprise to investors. What is a bit of a surprise is how dramatically Intel has turned around the strategy toward the sub $1000 market. I can't knock IDTI management for that - it's out of their control. Getting back to the stock price. The price is now near the low end of the historical range. My guess is that at this level new investors will be drawn into it at least to support the price. It doesn't take a genius to see the chart pattern and buy the stock in modest hopes that it will repeat. Still, the risk is not out of the stock. IDTI needs to show that it can execute on building more daxn parts.