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

To: k.p. chen who wrote (1524)	5/29/1998 10:25:00 AM
From: Noblesse Oblige	Read Replies (1) \| Respond to of 3247

To the "thread," I just received a personal phone call from Jeff Buchanan explaining this morning's press release. They have made full disclosure regarding the second quarter, though it is obvious (at least to this writer) that someone knew about the shortfall prior to the release. The shortfall is entirely temporary, and appears to only be relevant to the second quarter, which will still have revenue growth of 15%-25% from 1997's second period. Management indicates that for the full year, revenues will be at least 25% ahead of 1997. Based on my own spreadsheet model, the difference comes to $ 4 million in the second quarter, and that same number for the full year. Management attributes the difference to customer pushouts on a few programs (obviously Motorola in the digital cellphone area, which still doesn't have its act together), and unquestionably comes as a result of the lack of new production orders during quarter two. According to the press release, the programs were pushed out about a month or so, but obviously they were of sufficient size to cost us $3-$5 million in revenue in the second quarter. China plans are unaffected, and with the company announcing new guidelines for the year (up at least 25% in sales) we can still assume that full-year results will come to at least $ .90 per share, with dramatic improvement in quarters three and four. The news is far from disastrous, but will have injurious affects far beyond the 7 or 8 cent shortfall that will result for the year. All long term shareholders will remember the Motorola shortfall of a couple of years ago, and this will "frighten" those that do so remember. However, I would see this development in a perversely opposite perspective: Now that the company has made an important mid-course disclosure statement, shareholders will have good reason to trust future quarterly judgements during those periods when there are no such releases. In short, though it hurts us in the short term (very short, in my view, as quarter three will be infinitely better...after all, MOT is losing market share because it hasn't begun substantial shipments of digital handsets, and the analog stuff that it is producing is slowly going the way of the dinosaur!), the total impact on the year is likely to be minimal. Moreover, it has no relevance whatsoever for 1999 results, which I continue to view as likely to be in the ballpark of $ 1.50 per share. I am happy that the company has cleared the air. And, I congratulate the management for being appropriately forthcoming with its shareholders. It was the right thing to do.

To: k.p. chen who wrote (1524)	5/29/1998 12:42:00 PM
From: dfloydr	Read Replies (3) \| Respond to of 3247

Yup. They just warned. After just assuring. Bye, bye, credibility. Imagine how these guys treat their customers if they treat their investors like this? My comment about the price telling us something was all too true. In the year I have owned this stock, the price has been the only thing that has told investors anything. Meetings, conference calls, reports, have all been worthless or worse. Next thing they will need financing and there will be unwarranted dilution. I would say that management here has struck out big time. If they run into further pushouts ... if they hit snags in Manilla or China ... who is going to give them the benefit of the doubt? It will take a major management shake up to get this stock onto wall street's radar again. Maybe we investors better start looking for a buyer. Floyd