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Technology Stocks : VLSI Technology - Waiting for good news from NASDAQ !!! -- Ignore unavailable to you. Want to Upgrade?

To: SeaViewer who wrote (4275)	9/2/1998 6:26:00 PM
From: DanZ	Respond to of 6565

Jeff, I don't really know why R&D expenses increased year over year. My guess is that it is related to bringing on some new products or technology. The data below contains VLSI's R&D in both absolute terms and as a percentage of sales for the past 5 quarters. With a 10% decline in sales, they would have to get R&D expenses back to 1997 levels to avoid an operating loss. The only way that they would avoid a loss with R&D over 20% of sales is if they cut G&A enough to compensate for it. Mar 97: 24,015 (14.3%) Jun 97: 22,763 (13.3%) Sep 97: 24,831 (13.7%) Dec 97: 26,825 (13.9%) Mar 98: 28,037 (19.8%) Jun 98: 26,539 (19.3%) My estimate Sep 98: 24,806 (20.0%) The big question here is whether the market has already priced in the warning. I mentioned before that VLSI did not participate in the rebound this week and has underperformed the SOX for the past month. It was also down big on LSI's warning so some of this is priced in. The abosolute worst case IMO is cash value. I just can't see this stock trading below that. My guess is it will open near 8 and shorts will cover because there is little chance of more bad news coming out anytime soon. I'm really not expecting a huge move down but I have been wrong many times before.