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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 (1599)	6/1/1998 12:46:00 PM
From: Noblesse Oblige	Read Replies (3) \| Respond to of 3247

To the "thread," I have followed up this morning's report by Rob Cihra (of Furman Selz) and have had a direct conversation with him. Mr. Cihra "lowered" his earnings estimates for 1998 and 1999 (predicated on the uncertainties of the timing of Motorola's ramp in orders) for the singular purpose of being "cautious." As nearly as I understand him, he has lowered his estimate of third quarter gross margins for the same reason. He made a specific point to me of indicating that there is no reason for the reduction in third quarter margin judgements other than there is no reason to be aggressive at the present time. I think this has more to do with "politics" than analysis. Interestingly, he confirmed to me that he has a very large number of institutional "fence sitters", that like the TFS story but still consider the company in the process of "turning around." Moreover, he further indicated that over the last several quarters, we have had a disappointment in each... 1) comments about "maintaining" revenue gains, indicating the possibility of a couple of "flatish" quarters, 2) pushouts of programs in quarter one, 3) pushouts of programs in quarter two, ...and so forth. His honest assessment is that these institutions see the shares as "cheap" now, but are more inclined to do their buying as soon as momentum actually starts. In short, they don't want to "bottom fish", but Cihra even opined that he would be very surprised if he didn't see aggressive institutional buying ten points higher than here as soon as the company reported a quarter where there was no "fly in the ointment" in the conference call. Both he and I agree that although we can't be certain of specific timing, it is clear that MOT has to start digitial handset orders very soon or the company will be at major risk of market share loss for the important holiday season. As Cihra noted to me, the shares are profoundly cheap but that everyone is waiting to actually see the turn before jumping on board. From an institutional perspective, and in what is clearly a momentum driven market, the turn in perceptions and stock price will be radical as soon as the company can comfortably say that they see no problems coming in the ensuing two or three quarters. I have to admit, I think he is on the money. It may well be that holders of this company's shares will have had to put in a couple of years of patient, hard work, only to have the investment "pay off" in a four month period. As soon as we see some "production orders", you will be able to see the "turn." Let's hope that management's courageous assessment of a 25% growth in 1998 revenues is grounded in near certainty. If it is (and the result is more up to MOT's internal situation than anything TFS can do), our long walk through the investment desert may be nearly over. Good grief, someone get me a drink. <G>