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Technology Stocks : THREE FIVE SYSTEM (TFS) - up from here? -- Ignore unavailable to you. Want to Upgrade?

To: michael c. dodge who wrote (2258)	8/20/1998 3:07:00 PM
From: Noblesse Oblige	Read Replies (1) \| Respond to of 3247

Hi Michael..... The company has lost all credibility. Anyone with any personal integrity and insight has to realize that though business conditions can change, there was insufficient elapse of time from the quarterly conference call to two days ago to indicate a drastic alteration of the fundamentals. Either management didn't share it with the owners, or the management simply didn't see it coming. As I have said before, I don't know what is worse. Remember, management didn't see the Motorola situation coming a few years ago, either. "A foolish consistency is the hobgoblin of little minds." This is now a different business than the one we invested in. It is clear that the company is vulnerable to pricing difficulties, and the new technologies that were supposed to be out and protecting overall margins haven't really hit the street yet. There has obviously been dramatic slippage, as David Buchanan himself indicated his view (at the 1997 annual meeting) that LCiD would account for 35% of corporate revenue this year. Now the company has made a policy change and taken to announcing design wins rather than production orders. If this had been a consistent thing (designed to communicate positive information to the owners) over a long period, it would be something I could easily support. The cynic in me suggests that the new policy is designed to "help" valuations, particularly in a product line that is far behind schedule to introduction. I guess shareholders have been asking, "Where is the beef." Well, sad to say, at the moment, all we have is the waiter telling us how good it should be. And, everyone is ticked off because he still hasn't made any effort to take our order. The new China facility is being brought online at a time where pricing pressures place its output into the questionable category vis-a-vis profits, and though we will build market share, my own guess is that the company's share price...now impacted very negatively by the rightful assumption that management wasn't direct with holders as recently as a month ago...will only be reactive to announcements over new production orders which prove diversification of the customer base. This is a tough stock, and I don't see any earnings momentum developing for a long time. As shareholders, we are reduced to hoping for an unfriendly bid and/or a share repurchase announcement (though I think that prospect is illusory at best). There is a new reality in town.