Silicon Investor (SI) -- The First Internet Community

STOCKTALK

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.

Non-Tech : HMT TECHNOLOGY - UNDISCOVERED YET! -- Ignore unavailable to you. Want to Upgrade?

To: T Bowl who wrote (2002)	6/14/1998 12:40:00 PM
From: T Bowl	Read Replies (2) \| Respond to of 2253

Analysts Lowering Estimates on HMTT I can't guarantee that will be the headline this week, but I expect we'll see changes. It would be a lot easier if I could call Jonny vB and ask what the new projections would be. I can't, but I'll give it a shot anyway. What were expectations before the news? Consensus was for $0.28EPS in the JunQ. We did receive some guidance from them last Q. GM model is 33%-38% which they missed slightly in Mar when it cam in at 32.7%. They said they expected it to be a bit lower than that in the JunQ, but it depended on price stabilization, efficiency gains and "a little more volume would help spread fixed costs." Certainly the volume hasn't come, it's obviously fallen, and given the extreme oversupply situation at hand I find it hard to believe that the price declines have slowed. If you carry fwd the OpEx % from last Q and assume a GM slightly below the MarQ, say 31%, most analysts must have been assuming around $88mil in rev for the JunQ. Now that the outlook has changed, what will the new projections be? HMT is shutting down the plants this Q effectively for 1 wk. Let's assume that output/rev will go down by just that or $88mil*12/13 = $81mil for the JunQ. I'd say that's probably on the high side IMO, it'll probably be lower. Last Q we saw a drop in GM of around 5%. That's mainly due to the price erosion and a smaller production base to spread the fixed costs. That's all gotten worse this Q. We should see a similar trend this Q if not worse, but I'll give them the benefit of the doubt and throw in a few efficiency gains to help prop up the GMs. My estimate is for a GM of 27% for JunQ98. Of course the biggest factor this Q will be the lower volumes and high fixed costs. Before you go flippin' out, remember that their Deprec costs are increasing at $1.7mil/Q. What's it all add up to? I'd say $0.20EPS for the Q. My guess is a range of $0.17-$0.22. And I honestly wouldn't be surprised by lower. Other news you should hear: - the expansion plans have been put on hold. They might have to go ahead and add the 2 lines delayed as much as they can or they will lose their 30% deposit from IVAC. But the plan will stop for sure at 28 instead of 30 lines. - shipped units will fall into the low 8mil range. Keep that in mind because they have the capacity to ship about 13mil units now. That puts them at around 65% utilization. Anyone else want to stick their neck out? How about you Kam, care to give some insight into what will happen on the financial details side? What's there cash situation gonna do? todd