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Technology Stocks : CYRIX / NSM -- Ignore unavailable to you. Want to Upgrade?

To: Jim McMannis who wrote (28865)	8/14/1998 2:16:00 AM
From: Paul Engel	Read Replies (1) \| Respond to of 33344

McMannis - From NSM's 10Q filing - Doesn't look pretty - "Wafer fabrication capacity utilization for fiscal 1998 was 76 percent compared to 73 percent in fiscal 1997; however, wafer fabrication capacity utilization declined to 51 percent in the last month of fiscal 1998. " I don't recall Halla mentioning this little fact in the conference call - do you? That new fab - running at half speed ! Such a waste ! Deeply buried in this report we find : "The Company also believes the direction in the personal computer industry to accelerate product migration toward sub $1,000 personal computers may, in the short run, unfavorably impact revenues for the Company's other products in the area of chipsets, Super I/O products and temperature sensors. The Company remains very cautious about its future outlook, particularly with respect to the personal computer business. As a result, the Company expects overall revenues, particularly for the first half of fiscal 1999, to be down from the level of revenues recorded in the second half of fiscal 1998, resulting in a significant net loss for the first half of fiscal 1999. " I thought Halla loved the sub $1000 PC market ! It seems he can't sell the Cyrix chips into this market and the bread and butter NSM chips aren't being used either ! I'll bet Intel found another source for Super I/O chips as soon as NSM bought Cyrix ! In fact, that may be Standard Micro Systems ! We Also find : "While management expects to more fully utilize wafer capacity, unless new orders improve significantly, the Company will continue to run its manufacturing facilities at reduced capacity utilization rates in order to manage inventories and reduce cost. There is no certainty that the level of demand will be sufficient to fully utilize the additional new capacity. Failure to improve manufacturing capacity utilization will lead to decreased gross margin for fiscal 1999. "? This is pretty bad news, Jim. Didn't your TA charts tell you all this ? Paul

To: Jim McMannis who wrote (28865)	8/14/1998 2:51:00 AM
From: Paul Engel	Respond to of 33344

McMannis - This NSM 10Q filing describes a SCARY situation regarding Cyrix - Check this out: "In November 1997, the Company completed the merger of its subsidiary with Cyrix. The Company believes the technologies and capabilities of Cyrix and National are complementary. However, in the second half of fiscal 1998 the Company experienced lower volume and price erosion with the Cyrix 6X86 products and difficulties with ramping up production of the Cyrix Media GX product. The integration of the two companies' operations may have a further unfavorable impact on operating results if the Company encounters additional unforeseen obstacles or is unable to successfully complete its integration plan. Other factors related to the Cyrix business that may affect the Company's results of operations include the following: Cyrix is a small competitor in the personal computer market for socket-seven compatible microprocessor products where other large competitors such as Intel Corporation, Advanced Micro Devices, Inc. and International Business Machines Corporation significantly influence the price and availability of products. There is also the risk that the Company will not be able to sell existing levels of Cyrix product at a profit due to the current trend in product migration in the personal computer industry toward shorter product life cycles and more rapid price erosion for microprocessors. The shorter product life cycles and rapid decline in prices of microprocessors may also result in excess inventory of Cyrix products, which may result in decreased future gross margin and operating results. In addition, severe price declines in the socket-seven compatible microprocessor market may reduce the competitive position of the Company's proprietary Media GX family of integrated microprocessors. This could also result in excess inventory of Cyrix products, as well as reduced future gross margin and operating results. Cyrix is heavily dependent on "quarterly turns orders," which are orders that book and bill in the same quarter. The Company is also currently dependent on a third-party wafer foundry to manufacture Cyrix products and this can result in lack of control over the yield distribution of acceptable speed levels on Cyrix microprocessor products that may unfavorably impact product availability. The Company expects to commence the manufacturing of Cyrix product in-house to utilize the Company's 0.25-micron process capacity in its 8-inch wafer fabrication facility in Maine. As a result, the Company faces the risk of encountering difficulties in its effort to bring up the manufacturing capability for Cyrix products, which may unfavorably affect the Company's future operating results." Not exactly a vote of confidence, is it? Paul