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

To: dfloydr who wrote (1587)	5/31/1998 4:08:00 PM
From: Noblesse Oblige	Respond to of 3247

Hi D Floyd... Thanks for reminding us all to keep "on thread." Sometimes and under some circumstances doing so is a true test. On the issue that you relate regarding the difficulty of selling even ten or twenty thousand shares, of course lately you have been right. It is difficult, albeit not impossible. If you actually want to sell at stock at 19.50, and to make the sale you have to force it down a point with one broker (selling half), and give a second broker the order to sell the other half on the inevitable rally, you will probably get the job done within a half point or so (on average) of where you started. Of course, that assumes you want to sell, and not be "cute". This isn't quite as easy with multiple hundred thousand share positions, a fact that you clearly understand. So be it. I am in this position because I have "erred", a fact I have freely underscored in recent posts, as my working assumption has always been that it is profoundly important to all managements to increase their company's capitalization. That working assumption was mine in the past, but I have come to learn that my thinking was simplistic. It is not enough for a management to desire a higher capitalization, it has to be important enough for that to be a true focus of its day to day activities. In short, what appeared to me to be a tautology will require more interview time on every stock situation I involve myself in for the permanent future. Oh well, no one is perfect. As to the matter at hand, it is my view that TFS will still work out for investors (though speculators are surely being tested even now), as the world wide demand for cellular handsets and other LCD applications continues to grow at least 15% a year. It is unfortunate that TFS hasn't converted that demand into a plethora of new customers (particularly diversifying its risk in the cellphone area), but it pays to remember that the jury is still out on that presumed ineffectiveness. I factually know that Ericson has been out at the Tempe plant with a large number of personnel, and as Michael Dodge has pointed out, one of NSM's senior people gave a speech at SID (to technical types, hence, no real press coverage) indicating that the NSM/TFS partnership will bear fruit in both cellphone and projection applications by the end of this year. Management has indicated that it will be raising cash through a public offering in the not-too-distant future (if only they had given this some thought earlier...raising money when you don't need it is easier than when you do!), and though all shareholders would have benefited from the concomitant analytic coverage had they done so before, that result will be inevitable when the deal is actually completed. Moreover, management (though I am sure it hates this prospect) will have to open up communications to sell the deal, which suggests that some of the whiz-bang technological stuff being developed in the lab will finally be shown to Wall Street types with the express purpose of drumming up investment interest. (And, let me assure you, that what TFS has in the lab is every bit as good as what Kopin has, so it is even harder to explain the gargantuan mismatch in valuations!) Sorry, D Floyd, but one can not reasonably say that public relations is TFS's forte. Still, they are being forced into the position of having to do a better job at it because of raw business conditions...they certainly will need the money. You and I and the rest of the shareholders will unquestionably benefit, methinks, and assuming there is no substantive further pushouts on the MOT business, the timing of the deal (most probably 4/98 or 1/99) will reflect the company's best quarter in years. To be a seller of the stock here, you have to believe that MOT will totally fail in its efforts to get into the digital marketplace, and a close reading of the company's recent 10Q (where MOT says that 65% of its current cellular handset sales are digital) suggests that is highly improbable. Yep...they have problems. MOT isn't the same company it used to be. Some new blood is clearly needed in a number of positions. But, to dramatically affect the next 6-12 months in a negative way for TFS seems a large stretch. Hopefully, as we proceed into 1999, we will have some further product diversification, and perhaps some incremental customer diversification, too. The quarterly report to shareholders points in that direction with some important commentary, as it highlights the fact that TFS has signed a development contract for LCoS with a world-wide technology company, and is also nearing expected production orders for LCiD. Buchanan also noted that LCaD is receiving positive feedback in the market, though parenthetically I note this is still some time before it will be generating revenues. Take care of yourself, Floyd, and thanks for your contribution.