SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : C-Cube -- Ignore unavailable to you. Want to Upgrade?


To: DiViT who wrote (33635)6/5/1998 12:41:00 PM
From: Tyler Mayoras  Read Replies (1) | Respond to of 50808
 
To the thread: I doubled-down my Cube position today and thought I would run through my thought process for everyone. What Cube has done during the last two years is quite remarkable given the 2/3 drop in pricing of its primary product, VCD chips. It has been able to hold earnings and margins flat during this period, despite the absolute trashing of its main competitors. The funny thing is VCD was never meant to be a primary product, rather it was a transition product that would pay the bills until the main digital video technologies were developed. As a result, when Cube was a $60 a share based upon the strong sales of VCD chips, the stock was way ahead of itself. But, now at 19 and 3/8, fear has taken hold and the company is vastly undervalued. Remarkably, Cube's profitability has rolled along during the transition to DVD and DVB. As a result, Cube has built up a huge cash hoard, almost $5 per share. The market seems to be missing this cash element because of the $2 per share of debt on the books. However, that debt is all convertible debt, so the company could redeem the debt (eliminating 3 to 4 million of shares from the share base) or force conversion (which would reduce the company's interest expense). Either way it is a win for the company. Cube would still have almost $3 per share of cash to use for share repurchases or acquisitions of competitors. Cube has already established itself as a major player in DVD with wins from Pioneer, Hitachi, Akai, JVC and Marantz. It also is going to be a major player in PC-DVD with wins from Gateway, Toshiba and NEC. DVD will be 1998's product of the year. Nothing will stop the DVD train with the release of Titantic in the fall and Disney hits prior to Christmas. So, why hasn't the market taken notice. Fear! Fear and greed rule Wall Street. The greed players are following the internet stocks and will eventually get burned. The fear crowd has abandoned Cube and they also will eventually get burned with a missed opportunity. With estimates of $1.15 for 1998 and $1.45 for 1999, Cube is trading at 16.5x and 13.3x respectively. Even if Cube was flat with last year at $1.02 it would still only be trading at 19x. Lastly, don't forget about Divicom. Divicom is in essence a systems integrator for video networks worldwide. This is a franchise business that would be nearly impossible to replicate. Strong network systems integrators, like Int'l Network Services, traded at 40x to 50x earnings. Cube provides that steady cashflow and Divicom is the pearl within the oyster. I love to buy a stock when the blood is in the streets and blood is running all over the semiconductor sector. Cube is a shining light in this market. And event if the US and the world were to go into a strong recession, what do people do during a recession? They stay home. They forgoe expensive restaurants, theatre and travel, opting instead to stay at home and watch movies with friends and family. With DVD prices dropping to $300 by the fall, these affordable devices will supply the future home entertainment to the world. I believe the worst case scenario is that another major chip player buys Cube for between $35 to $40 per share. I hope that this does not happen. I would rather hold my investment for 4 to 5 years for a 6x to 8x multiple of my investment. Just some thoughts, Tyler



To: DiViT who wrote (33635)6/5/1998 2:26:00 PM
From: BillyG  Read Replies (2) | Respond to of 50808
 
AC-3: The Sound Of Success

Chipmakers hone in on AC-3 as enabler of powerful audio systems

From the Semiconductor pages of Electronic News: June 1, 1998 Issue

By Peter Brown and Gale Morrison

San Jose--Digital signal processors (DSPs) are taking the market by storm as they provide an
avenue to increases in performance and functionality, with DSPs that support multiple features
becoming a staple of the electronics market. One area that is booming because of this move to
multi-function ICs is the audio chip market for both professional and consumer applications.

Much of the heat being generated in the consumer and professional markets is in applications such
as Virtual Surround Sound and music studio mixers, digital versatile disc (DVD) and high
definition television (HDTV). At the core of most of these applications are high performance,
multi-function DSPs, digital-to-analog converters (DACs), A-to-D converters (ADCs) and digital
codecs (decoder/encoders) or sometimes a combination of all four.

What is really driving the consumer electronics market, however, is the switch in applications to
multi-channel Dolby AC-3 compression. Satellite broadcasting, HDTV, DVD and other
consumer electronics systems are now using AC-3 for audio. AC-3 is a compression algorithm
that transforms 5.1 channels of bit stream audio into a single bit stream at CD-quality at a
compression/performance ratio of 13- or 14 to 1.

This allows these consumer electronics devices to have powerful high quality audio while not
consuming performance bandwidth. Because of this compression, however, these consumer
applications need an integrated, powerful audio processor to decompress the stream so the sound
comes out clear. Providing these multi-function, high performance ICs are Texas Instruments,
Motorola, VM Labs, Aureal Semiconductor, C-Cube Microsystems and others.

Creating A Need

"One of the areas in the consumer space that has always lacked a need was the stereo sound.
However, now that need is growing and being filled by digital audio ICs," said Michael Bolcerek,
president of Desper Products, a division of Spatializer Audio Laboratories. "Receiving more of a
multimedia audio experience is enabling a more complete total body experience. It's not all just
visuals anymore."

One of the areas where Spatializer plays--and many others are entering--is the virtual home
theater area or Virtual Surround Sound market--where instead of a five-channel Dolby surround
sound, a home is equipped with two speakers that provide the same environment with less space.

"Having the audio experience out of two speakers seems to be more appealing than a full
multi-channel five speaker system that consumers either don't have the space for or don't want to
wire their house for," said Mr. Bolcerek. Spatializer is also moving toward headphones with the
capability to give you the surround-sound sensation as well.

Beyond surround sound lies the trademarked Circle Surround that is being developed by Analog
Devices Inc. (ADI) and engineer Derek Bowers. The latest version, Circle Surround 5.2.5,
allows audio engineers who employ both the encode and decode ICs to place any voice,
instrument or sound effect at any predetermined location within the 360-degree-radius
surrounding the listener, according to ADI. The company is producing Circle Surround 5.2.5
decoder ICs for OEM applications in both analog and digital form.

One of the ways that this type of Virtual Surround Sound and Circle Surround may be
proliferated is through the transition to HDTV and DVD players expected to begin in 1999.

DVD Driving Development

Dolby Labs' (literally a household name in sound) AC-3 has also been adopted as the audio
format for HDTV, digital cable TV, direct satellite broadcast (DSB), Virtual Surround Sound and
DVD. Dolby has certified numerous audio ICs from companies such as ADI, C-Cube
Microsystems, TI, Motorola, National Semiconductor, ESS Technology and many others for
AC-3.

With all of these consumer electronic applications and companies now digitally enabled with
Dolby AC-3 technology, is the proliferation of these new audio products far behind? Some might
say it's already here in the DVD space. Not only are DVDs driving a need for better audio
capability, the systems themselves require integrated digital audio ICs in order to drive this high
quality sound.

Norwood, Mass.-based ADI has long held a comfortable position in ICs for professional audio
equipment; the company has broad relationships with Dolby Labs and the Harman group of audio
equipment suppliers. ADI now aims to move some of that engineering expertise into higher
volume applications, like standalone DVD players and other "prosumer" applications like home
digital mixing boards.

Also coming to market now are the SSM2275/2475 dual audio op amps, priced at 80 cents and
$1.40 respectively, in OEM quantities. Both are ADI proprietary components that, like other
converters the company produces, are required in DVD systems. The '2475 is scheduled for
release in 2H98.

Ken Nevard, ADI product marketing manager for digital audio products, has just returned from
Amsterdam, where ADI introduced a new AD1855 stereo audio DAC priced at $3.95 each in
10,000-unit quantities. This part is "already designed into a lot of DVD players," Mr. Nevard
said. "But the performance it offers (113 decibel dynamic range and SNR), are allowing
professional equipment makers to employ them as well," for mixing consoles and home studios.

More on the DVD consumer side is ESS Technology, with its ES3120 MPEG-1 audio and
ES4208 AC-3 audio devices targeting the video CD (VCD) and DVD markets, respectively.
According to Tai Nguyen, director of marketing for consumer products at ESS, integration of
audio devices and other components in these consumer electronics is the key. The Video CD
market, which is mainly located in Japan and China, uses MPEG-1 audio for Karaoke playing
and for the high quality audio in VCD movies and the DVD chip utilizes the AC-3 standard.

"There are a lot of pirated discs in China so the quality of the audio and video is not that great, so
it is necessary for these VCD players to play these poorly formatted discs as well as high quality
ones," said Mr. Nguyen. "For DVD, cost is also the issue, so by integrating the audio portion in
with the video we can save end-users and DVD player manufacturers a lot of money."

Mr. Nguyen said one possible way to stimulate the consumer market for DVD players is the
move by PC makers into DVD-ROM drives. By enabling DVD on the PCs, DVD players
become more attractive because you can cross-use them, he added. C-Cube and
STMicroelectronics are also known for enabling audio and video in DVDs.
sumnet.com



To: DiViT who wrote (33635)6/5/1998 2:41:00 PM
From: BillyG  Read Replies (2) | Respond to of 50808
 
Trident DVD/graphics chip for notebooks; it ships 4Q98......

From the June 1, 1998 Issue of Electronic News

The Circuit

By Gale Morrison, Peter Brown and Dylan McGrath

*****

Trident Microsystems has introduced what the company claims is the "NeoMagic killer" in
the on-going battle for notebook PC graphics (EN, April 20). Trident's Cyber 9525DVD chip
is an embedded memory 3-D AGP graphics chip that provides complete DVD capability to
notebook PCs. The device integrates 2.5 megabytes of SDRAM and offers full motion 30
frames per second DVD playback at 9.8 megabits per second. The chip also includes motion
compensation to run full-motion video with AC-3 decoding on even slow Pentium-enabled PCs.

The chip also supports AGP 2x. The Cyber9525DVD is now sampling priced at $37 in
10,000-unit quantities. Production is slated to begin in 4Q98.

sumnet.com
Click on "The Circuit"