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To: Judy who wrote (3926)	8/9/1998 5:42:00 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 5058

Judy, if my calculations are correct, their book value is down to $5.6/shares and going down at an alarming rate of about $1.5/share per quarter. I think that this company might be on a death spiral simply because they do not have any quals yet on their MR technology. If they do not get into the game, their burn rate of more than $30 MM per quarter (even they cut out R&D) will kill them. Their sales in the last quarter are down 72% from the same quarter last year, yet expenses have been cut less than 30% and their gross margins are negative. If they get a quals in MR and GMR soon, they could survive (they have enough cash on hand for I would say two to three quarters), if not, I doubt it. I should mention, however, that APM was in a very similar situation few years back (and the stock dropped to around $2 then), and they pulled a miracle. Stitch is in a much better position to tell us what are their chances of getting a quals. As for an acquisition, I doubt that at the present time Samsung is in a position to do any acquisition. Their cash is needed to protect their turf in some other areas, not going on an new expansion binge. Zeev