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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 (1618)	6/1/1998 11:52:00 PM
From: Noblesse Oblige	Respond to of 3247

Hi Michael.... Haven't been to the Carlyle in ages. Bobby Short still in attendance downstairs at the Cafe? I think you are on the money regarding the 27 year old. Momentum is king, and the delays in MOT getting its act together have put TFS's earnings power back a couple of quarters. Although I have been critical of management in the past (indeed, still harbor a belief that they don't do enough for shareholder values), I honestly don't think you can blame them for MOT's internal difficulties, which have been written about in virtually every major business journal. My own view (which comfortably mirrors that of Mr. Cihra AND TFS) is that MOT is so far behind in getting into the domestic digital handset business that it has to move relatively soon, or risk substantial market share loss that will most likely never be recovered. MOT has to get the necessary materials from vendors, manufacture the handsets, set the distribution in motion, begin advertising, and ramp up production...all prior to the main Holiday selling season that essentially starts in September. It is much to do, but if they are to do it, they don't have much time left to get started. When they do start, we will get our fair share of the business. As Cihra pointed out in this morning's written piece, Motorola's digital handsets are likely to use greater supplies of LCD's, TFS's core competency, whereas the older analog systems generally required LED's. Hence, MOT's accelerated manufacture and distribution of digital phones should have a pronounced impact on TFS. Having said that, the delays to date have been singularly disappointing, and shareholders...remembering the MOT cancellation of a couple of years ago...undoubtedly fear the worst. What they have collectively lost sight of, however, is that the company currently expects 1998 revenues of approximately $55 million from non-MOT sources, roughly 60%-70% more than was the case in the year that MOT had the program cancellation. Though this diversification isn't quick enough for shareholders (and certainly shouldn't be for management), the company is moving in the right direction. If Cihra is correct (and I have reason to believe that he is) and TFS garners another cell phone manufacturer as a customer, the substantive concern about business concentration will be largely ameliorated. I think the shares have overdone it despite the recent "warning," which really amounted to a shortfall of approximately $4-$5 million in second quarter sales. Moreover, those sales may actually have to be made up in quarter three, as MOT will unquestionably be running its manufacturing facilities around the clock to catch up with inventory needs. Fear? Greed? The markets always react to fear more quickly. In this case, anyone reading the flow of the stock can already smell the fear. Have a good night Michael. Say hi to Bobby for me. PS: Raefon and I both had conversations with Cihra today, and he told each of us the same thing essentially. His pulling down of his earnings estimates was more a political than an analytical decision. He reasons that even if his reduced estimates are correct, the shares are so grossly undervalued anyway that there is no point in "sticking his neck out." And, assuming shipments start to track normally in the next few weeks, the final earnings reports for the third and fourth quarters will so far exceed estimates that even the momentum guys will have to notice. I hope when the time comes that there are still some 27 year old gunslingers employed in the industry.

To: michael c. dodge who wrote (1618)	6/1/1998 11:54:00 PM
From: dfloydr	Respond to of 3247

Hi michael: <<I wonder who made the displays for the 65%-of-sales MOT digital phones sold in the first quarter ??? Did we get any of these ???>> To the point!! I wonder if any on the thread can answer that? <<Floyd....The transmission "infrastructure" dictates the handset frequency and mode. That equipment decision is highly political, and particularly so in the third world. Its just a morass of competing standards.>> Amen. This is brought on by all concerned. The switch makers want to make each country their exclusive domaine and will invent you a different standard and probably kick back some of the anticipated monopoly profit etc., etc.... <<TFS Titanic>> Very cute! Love it. And in this vessel we have no life boats so women and children go down with the rest of us. I think I am going to try to scrounge a golf game tomorrow and maybe TFS will take the opportunity to recover. Floyd