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Technology Stocks : CRUS, good buy? -- Ignore unavailable to you. Want to Upgrade?

To: DJBEINO who wrote (5896)	6/5/1998 11:31:00 AM
From: Calvin Scott	Read Replies (4) \| Respond to of 8193

Just some thoughts....... Realizing that Cirrus is in a bit of a rut and that for the most part the semiconductor industry is also flat and some of the other factors (namely Teo) maybe its time to pause and look at where Cirrus is in all of this. Now first off I need to state a disclaimer. Most of these thoughts are mine and mine alone and should not be taken as gospel by any stretch of the imagination. This is just my opinion. Also, I have to confess that I took the bait when CRUS fell below 11 and I am back in this with both feet. However, I am not in this for the long haul if that is of any consequence to anyone. I was hoping to make a couple of quick bucks but alas, I am hanging. You folks that lurk from over on the Yahoo board, (yes I do check it out now and again) I am in total disagreement (denial) that this stock should be shorted. In fact, I disagree so much that from this point on, I will not even mention the word short! As I have said in the past, I believe Cirrus to be a very viable company in the sense that there is momentum from the previous 3 quarters and I see little if anything to disrupt their string of profitable quarters. I am still ticked that Kelly left and that Hackman has taken the reigns once again but it is time to move on with this management issue (yeah lets move on to new management). So for these ramblings, I will forego my whining about Hackworth, Alexy, Ross, Billham-Boult, Patil, ad nosium. Cirrus has two very good things going for it in terms of products and equity. First, they have cash and a lot of it. So much so that even Hackworth said that there is a sense of urgency to do something with it. Now again, it is my opinion but I believe that Cirrus has begun their stock buy back. These large blocks of shares which I believe are on the buy side, has to be the buy back (my opinion). I could be wrong but I don't think so. Now, if this is true, what will the company do with these shares? They have three options. They can retire the shares, thus increasing their market cap. They can use the shares to cover the re-priced options which, by the way, are now higher priced than what Cirrus is trading for as I write. Or, they can hang onto the shares, use them for voting purposes, then could either retire them or sell them back on the open market. Well I guess there is a fourth option which would be a combination of the above. The second good thing Cirrus has going for it is two very good business units in Crystal Semiconductor and Mass Storage. Granted, the mass storage group is starting to experience both competition and a week disc drive market but they are still the leader in read channels. I have said this before and I will say it again. Someone could come in and buy Cirrus, sell off both of these divisions for ~$500 million each, take what cash they have left and call it a day. In spite of what some have described as a worthless product in MediaMax the point is that they, Cirrus, continue to come out with technology that by itself may not be the most profitable product, but, they add to the portfolio. Why do you think a company like National or LSI are so successful. They have hundreds of products. I am not saying that this is Cirrus's strategy but I do like the fact that they continue to press and come out with new products. Who knows, one of these times they may hit a homer but you can't hit if you don't come to bat. So, we are at or near the 52 week low. A lot of bad talk about management, products, the potential not to meet estimates, the Teo thing or lack of it and so on. I hardly mentioned the "Teo" thing. Certainly a factor but personally, I am tired of the speculation. We will just have to wait and see what cards he will play. Well, as Frank over on the S3 board says, buy on bad news and sell on good. I think I will. Calvin Scott

To: DJBEINO who wrote (5896)	6/6/1998 12:36:00 AM
From: Grand Poobah	Read Replies (1) \| Respond to of 8193

Those who have not read the Hackworth interview on foundries should do so. It is very informative not only about the foundry industry but also about Cirrus' struggles over the last few years. I thought Mike pulled together a lot of things from the past that I have seen elsewhere and put them into a coherent whole. I believe the changes in the foundry industry have had a profound impact on Cirrus over the last three years. In fact, I would go so far as to say that they are the foremost reason both for Cirrus' severe troubles in '95-'96 and their continuing inability to come charging back. (I am not saying that there aren't other reasons, e.g., increased competition in graphics, semiconductor market conditions, poor project management decisions, etc.) Those who have followed CRUS for a few years are familiar with the situation three years back, but the Hackworth interview provides a good summary of the effect of the changes in the foundry industry at that time: "But at about that time, there was a plethora of fabless companies coming to market because the model had been proven and was obviously very successful... And with a large number of new fabless companies wanting to buy the same wafers, the foundry suppliers saw this as an opportunity to bring on new customers and not have Cirrus Logic represent such a dominant percentage of their business. That was a very terrible situation for us . . . We went from four main foundry suppliers in 1994 to some 12 foundry suppliers at the peak, which was an enormous dissipation of our product development resources." (italics mine) But what was a new perspective to me was Hackworth's take on the recent changes among the foundries which have also served to hurt CRUS. The size and services of the foundries have gone from being hard on large and growing fabless companies like CRUS circa 1995 to being beneficial. Now CRUS is being hurt by having more capacity from their JV fabs at a time when they could really benefit from using the foundries. But Hackworth's explanation of the evolution of the foundry industry is what fascinated me: "The foundry companies are highly competitive, and they all are pushing the technology very rapidly. Each one wants to be the first with 0.25-micron, with 0.18-micron, with copper, be the first guy with this, the first guy with that. The free-enterprise system is working its fantastic magic with the foundry industry, and that allows the semiconductor companies to rely on having a strong wafer supply, attractive prices, and outstanding technology. It's probably better than what any single company can do internally." Again, I believe that those who haven't read the article would find it worthwhile: pubs.cmpnet.com Many thanks to DJBEINO for making the rest of us aware of it. G.P.