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

To: michael c. dodge who wrote (1549)	5/29/1998 7:26:00 PM
From: Noblesse Oblige	Respond to of 3247

Hi Michael.... Congrats on your common sense. The shares actually traded down below 16 because of one seller (believe it or not) that had 25K to sell, done endlessly in small pieces rather than showing the entire order. In short, it was the selling of an idiot. I have spent the entire day telling everyone I know that I am glad that I didn't sell the shares in the 19's, disturbing my holding period. For what? This problem amounts to all of a one month delay. TFS has already been given shipping instructions on two of the three MOT orders, and the final one most probably will come in mid June for the latter part of the month. Frankly, I can't believe that the people that sold this stock read the same news release that I did. Can you believe that Mr. Conservative, Jeff Buchanan, gave active guidance indicating that the year's revenues would be AT LEAST (obviously implying minimally) 25% higher than a year ago? Anyone that even bothered to run the numbers knows that this implies revenues of at least $ 108 million. Given that the first two quarters were $ 18.5 million and approximately $ 22 million, this IMPLIES that the second half of the year will be close to (if not over) $ 70 million!!!! So...we had a delay. Big deal. Another month of hanging around, waiting for an uptick. All of us are investors anyway. However, assuming they hit those numbers (and the people at MOT don't push back deliveries another month...hardly likely now) these sales figures should lead to earnings of nearly 30 cents and about 40 cents in quarter's three and four, respectively. So...if you normalize the first two quarter's results, both of which were hit by MOT pushouts as well as the second quarter pre-opening costs (and which won't be repeated once the programs are up and running, as they surely have at least 18 months to collectively run!), TFS would be earning close to $ 1.20 for all of 1998 (.25, .25, .30, .40 = $ 1.20), making the shares a lowly 14 times earnings in a market trading at twice that level. Yeah, I know its a credibility issue. I guess it always is. But, management would never recover if it mislead investors with this press release. Knowing Jeff Buchanan as I do (and understanding his profoundly conservative nature) gives me confidence that we are about to turn the corner. Undoubtedly, it is this issue which kept a lid on the stock during the entire first and second quarters. Once the production orders are being shipped against, whatever doubts there are about the next nine month's performance should be eliminated. It has been a long day, but despite the results, I am gladdened by the release being made and the news now being disclosed to all the shareholders. Enjoy your weekend.