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Technology Stocks : Atmel - the trend is about to change -- Ignore unavailable to you. Want to Upgrade?

To: Paul Jamerson who wrote (8621)	7/27/1998 2:39:00 AM
From: Greg Jenkins	Read Replies (1) \| Respond to of 13565

Here is the latest from AG Edwards dated 7-17-98: Comments on Q298 results Yesterday after the close, Atmel reported results that were in line with our previously revised earnings estimates. Earnings were break even on revenue of about $288 million. Temic revenue continued to improve and was up about 10% sequentially while Atmel's commodity oriented non volatile memory revenue was down more than 25% sequentially. On a product by product basis, the company has made great progress in its microcontroller business, introducing about 20 new products since January. In addition, demand for its silicon germanium products is starting to heat up, and its logic and serial EEPROM products are doing well. Flash pricing, which is one of the primary reasons for the weak results, is down about 30% since the start of the year. Atmel's flash revenue fell despite shipping more flash chip units due to lower ASPS during the quarter. On the expenses side, Atmel's SG&A expense was extraordinarily high due the Temic acquisition, and we expect them to decrease as a percent of revenue in the coming quarters. R&D expenses will likely remain steady as the company continues to focus on getting new products out the door in an effort to remove the commodity portion of its revenue base. EPROM sales were down significantly during the Q298, as several customers have switched to using flash memory as an alternative because of its attractive price relative to EPROM. We expect this general weakness to persist until market conditions improve for consumer electronics products, which could happen in the fourth quarter. We are currently reviewing our earnings with the company, and will finalize our new numbers shortly. For now, we are going to lower our revenue growth expectations for the third quarter. We now expect Q398 to be flat sequentially, also producing a very slight loss of a penny. In the fourth quarter, we expect the holiday season to boost sales of consumer electronics products, lending some strength to Atmel's bottom line in the year. We continue to believe that the progress Atmel is making in the rejuvenation of its product line will remove some of the exposure the company has to commodity non volatile memory, and we have already seen evidence of this for the last 2 quarters. Our rating remains buy for speculative investors with a 12-18 month price target of $20. ------------------------------------------------------------------ I will let you know when AG Edwards finalizes their figures for quarter 3 and 4. Greg J.