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Technology Stocks : SmartFlex Systems (SFLX) - Blitzkrieg or Sitzkrieg? -- Ignore unavailable to you. Want to Upgrade?

To: Kent Sarikaya who wrote (687)	7/15/1998 12:07:00 PM
From: rich evans	Read Replies (3) \| Respond to of 848

Well, SFLX glory was short lived as I see it is down to 8.I expect in Q3 they will do 35 mill based on the backlog of 31.5 mill which they indicated they would ship and some turn business. Gross margins should be about 11.2. I would expect the SGA to stay or increase slightly next quarter. They indicated sales expense would be higher becasue they would have higher commissions to pay. Tax rate stays at 33%.In Q2The other income they indicated was currency gains from changes to balance sheet etc.Then they have interest income. It looks like about 1/3 of income was interest,1/3 was currency/ and 1/3 was operating. They definitly indicated they are going into new strategys involving acquisitions as Tony mentioned it and John confimed somewhat when he discussed the cash position in the future. It seems though that this was aquiring a greater design and engineering capabiltiy to make them a one stop shop and also move away from storage and into telecom etc. If you hold the margins about 11.2 gross and keep the interest income and hold the SGA and taxes the same, I calculate they could do about 13cents which is what they did in Q1.The best news is that they have a lot of new programs underway. Bill mentioned 15 which is and all time high. They continue to expand CEBU but Mexico is not doing as well and they have cut back people awaiting more business there. They have new sales organization which is now international. So future still looks promising, companys balance sheet ratios -inventory turns , DSO , etc are all very good, and Q3 should be improvement. Company probably will not buy back stock as this would prevent them from doing a pooling transaction. So they could be planning one .There has been a big change in shareholders it seems from yesterday,s action but the float still seems only about 3 mill. I would think SFLX would go up over the next 3 months to reflect better things ahead, but still feel a wash sale exchange for some AFLX is a good move to make before AFLX reports. Rich