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

To: Noblesse Oblige who wrote (1578)	5/30/1998 6:52:00 PM
From: michael c. dodge	Read Replies (2) \| Respond to of 3247

Initial review indicates plenty of global demand for handsets, and specific demand by MOT for cellular/PCS displays. MOT Cellular Products Segment sales increased 3% yr to yr for Q1, to $2.81B. Orders were flat and segment operating profits were lower. Within this segment, Cellular Subscriber Sector (includes the handsets) sales and orders declined. Overall MOT inventories up 8% 1st quarter, by $300M. Net cash provided by operations was $43M first quarter, compared to $435M first quarter '97.....due primarily to lower earnings and increases in inventory. They are apparently reviewing and not ordering stuff until they need it. Looks like a simple pushout, so far. They had the same backlog in cellular products at 12-31-97, as at 12-31-96, so I think the cellular/PCS sales are okay, at least not tanking...... I have seen today about 6 different handset forecasts, from 200M to 450M units to be sold in Y2K. I trust the Nokia estimate of 250M, along with the D. Buchanan estimate of 230M handsets to be sold in 2000. Interesting that 65% of Y2K sales are expected to be sales to existing customers........upgrade sales. Subscriber growth estimates run about 30%, compounded, out 3 years. Plenty of handset demand, regardless of SEA, etc. There are also more than a dozen different technology standards around the world, based on different bandwidth for transmission, and digital or analog transmission. There are a few dozen types of handsets out there, and they are proliferating. The handset market is over-differentiating, which should give TFS more sales opportunities, as it is better at this than larger suppliers may be. I don't know what TFS' response to this phenomenon is, if any. MOT says (10q) that 65% of their handsets sold first quarter were digital. If that continues, they will catch up. Anyway, I think MOT management is taking a look at all the MOT programs, and timing of ordering inventory, etc., as well they should. I do not think TFS has a life-threatening problem from this, and I am not going to worry further about yesterday's press release. I do not see a structural problem. If we get a selloff, I will be a buyer. mcd