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Technology Stocks : THREE FIVE SYSTEM (TFS) - up from here? -- Ignore unavailable to you. Want to Upgrade?

To: raefon who wrote (1486)	5/20/1998 4:51:00 PM
From: Noblesse Oblige	Read Replies (1) \| Respond to of 3247

Hi Raefon.... Sorry to say, either the company hasn't yet signed an order of sufficient magnitude to justify a release, or management is too busy in Anaheim to have much in the way of commentary regarding business conditions. The company's senior management made a solid informational presentation following the last quarterly report, but since that time tidbits relating to the business have been "sparse." I see no reason to change quarterly estimates (which I now have at 17 or 18 cents per share), and am reasonably sure that there will be a significant ramp of revenues in quarter two, possibly eclipsing the first quarter's numbers by almost 50%. What is extremely frustrating to me is that the market capitalizations of competing companies overshadow that of TFS despite the fact that this company is the largest independent LCD business in the western hemisphere, has some interesting technologies under development, and is substantially profitable as we speak. Others simply don't measure up by these standards, though their shareholders are unquestionably happier. It appears intuitively obvious that we are now suffering from the lack of attention given to stock valuation and communication over the last few years. Unfortunately, I believe that TFS's attitude has always been "If we put up the numbers, they will come." The last several quarters indicate the hollowness of that assertion, particularly when start-up businesses can achieve (with no sales or earnings!) market capitalizations several octaves above what the TFS shareholders "hear." This continues to be a "tough" stock, frustrating professional and amateur investors about equally. I remain of the view that the "story" is a strong one, and that earnings (despite the strange decision to expense rather than capitalize all pre-opening China costs) will be heading straight up over the balance of the year. I believe that the decision to expense (which though more conservative is certainly less popular among reporting companies) will penalize the current quarter's results by about seven or eight cents. Without those "charges" the current quarter may well have been about 25 cents, and I question the sense of choosing this accounting procedure when it is intuitively obvious that the company will be raising money some time during 1998 or early in 1999. After all, if the stock reflected the higher earnings, any equity (or convertible) offerings would involve fewer share sales resulting in less dilution to existing shareholders. In short, the decision probably costs all of us real money. Results for the balance of the year will be much better, of course, as revenues start to aggressively build in the latter part of this reporting period and continue on to yearend. The problem for shareholders is akin to that old conundrum each of us first heard in high school: "If a tree falls in the forest and no one is there to hear it, has it made a sound?" Moreover, after speaking to a few "thread" participants as well as some others interested in this stock, it is clear that following the shareholder vote, corporate responsiveness has again plummeted to its former condition. Accordingly, I have been told that many calls to management (or emails, etc.) haven't been responded to at all. That senior management is busy opening the China facility and being at the Anaheim show mitigates (to a small degree) that lack of responsiveness, but one can't help but feel that the shareholders have again been lost as important partners/contributors to the success of this business. Moreover, the anticipated "coverage" of the stock by additional broker dealers still hasn't materialized, despite the fact that it has been "hung" in front of shareholders as a corporate goal for many quarters. The best means of reducing a company's systemic undervaluation is to educate the public about its uniqueness and prospects. Maybe I am just more frustrated today than in previous weeks, Mr. Raefon...but TFS seems to be (at least to this long suffering shareholder!) a case of "always jam tomorrow and never jam today." Have a good evening.