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Technology Stocks : Vitesse Semiconductor -- Ignore unavailable to you. Want to Upgrade?

To: The ChrisMeister who wrote (1688)	9/23/1998 7:27:00 PM
From: MoonBrother	Read Replies (3) \| Respond to of 4710

Analyst's Latest "STRONG BUY" reiteration ------------------------------------------ 10:23am EDT 23-Sep-98 Needham & Co. (Peter Dale 212/371-8300) COMS AEHR VTSS NEEDHAM MORNING RESEARCH SUMMARY Needham & Company, Inc. (212) 371-8300 Equity Research Trading Desk September 23, 1998 (212) 371-0312 800-843-4446 Equity Research Morning Summary Vitesse (VTSS, $25.88, Reiterating Strong Buy) - VTSS went into the quarter fully booked with about five months' backlog, and we expect that they will have a similar backlog level going into the December quarter. We are confident of our book-to-bill estimate of approximately 1.17, and our expectation of 17% sequential revenue growth (September over June). --------------------------------- To $28 here we go! Tomorrow is D-Day for breaking $28. VTSS should gap up at above $27, and clinch $28 sometime in the afternoon. After that, there will be no meaningful resistance until $30 by week end. Next week looks even brighter at this point. Accompanied by FED's rate cut, VTSS should easily back up to $32 ~ $35 range, and stay there until Q3 report is out on Oct 20. To those who are still waiting on sideline, buy as soon as you can! With $35 within reach, you have $7 profit right here in a month! To those who already bot, DON'T SELL!!! You have a chance to make significantly more money in the next few weeks! How many times we kick ourselves by selling too early! Turn off your computer, buy yourself a bear, go have a good time with whoever you love, forget about VTSS for another week. You will be handsomely rewarded! Buckle up and enjoy the ride! MB

To: The ChrisMeister who wrote (1688)	9/23/1998 7:29:00 PM
From: MoonBrother	Respond to of 4710

Another Report -------------------- 08:13pm EDT 22-Sep-98 Needham & Co. (David Wong (212) 705 0314) VTSS PMCS LEVL Communications Semiconductor Industry: Buying Opportunities Needham & Company, Inc. 445 Park Avenue, NY 10022 (212) 371-8300 Equity Research Morning Note David Wong, Ph.D. September 22, 1998 (212) 705-0314 dwong@needhamco.com Ryl Ashley (212) 705-0406 Communications Semiconductor Industry REASON FOR REPORT: Buying Opportunities in Communications Chip Space Summary We think there are buying opportunities in the wireline communications chip industry. We are confident of our September quarter revenue and EPS estimates, and consider near-term visibility to be excellent. In particular, we see opportunities in the shares of Vitesse, PMC-Sierra, Level 1, Applied Micro Circuits Corporation. Discussion We think that the market has overreacted to news from telecommunications companies (e.g. Tellabs, Ciena and Alcatel) in recent weeks, and has driven down prices in the wireline communications chip industry (suppliers to telecommunications companies) to levels that are very attractive. Conversations with managements of the companies that we follow lead us to believe that the communications chip companies are well on track to meet expectations this quarter. We believe that this sector will stand out in the September quarter earnings season with the bulk of the companies reporting strong sequential revenue growth and good book to bill ratios. In fact comments from two of the telecom equipment companies, Tellabs and Lucent, have strengthened our confidence. Tellabs said that it expected the December quarter to be in line with analysts' estimates, which would imply a rise from estimated EPS of $0.46 in the September quarter to $0.58 in the December quarter. Lucent commented that there continues to be seasonality in its business which implies a sequential increase in December revenues from historical data. This suggests to us that business for telecommunications chips will continue to be strong in the December quarter. Specifically, we would like to comment on opportunities that we see in four of our companies: Vitesse, Level 1, PMC-Sierra, and Applied Micro Circuits Corporation. Figure 1 contains valuation data for these four companies. We have Strong Buy Ratings on Vitesse and PMC-Sierra, and Buy ratings on Level 1 and AMCC. Figure 1: Valuation Data For Our Wireline Recommendations SEP Qtr SEP Qtr SEP/ 1999/ Price P/(NTM EPS Est. Est. JUN Qtr 1998 (22/9/98) Est. Book/ Seq. Seq. EPS) Bill Growth Growth Vitesse $0.20 1.17 17.1% 57.2% $25.88 31.4 PMC-Sierra $0.27 1.05-1.07 2.6% 31.7% $35.25 29.9 Level 1 $0.21 1.10 6.9% 31.1% $23.00 25.9 AMCC $0.17 1.15 3.4% 24.4% $16.13 20.9 6-12 Month Symbol Price Rating Target Vitesse VTSS $48.00 Strong Buy PMC-Sierra PMCS $56.00 Strong Buy Level 1 LEVL $33.00 Buy AMCC AMCC $35.00 Buy Source: Company Reports, Needham & Company Estimates Vitesse We reiterate our Strong Buy on Vitesse. This is our favorite company in the communications chip industry, for the following reasons: * Vitesse went into the quarter fully booked with about five months' backlog, and we expect that they will have a similar backlog level going into the December quarter. * We are confident of our book-to-bill estimate of approximately 1.17, and our expectation of 17% sequential revenue growth (September over June). * We believe the Colorado fab is ramping better than expected. We expect revenues from this fab to be $15-20 million, up from the original plan of $12-15 million. PMC-Sierra We reiterate our Strong Buy on PMC-Sierra. * The company is a leader in the high growth ATM sector. * We believe that new products and product areas such as Gigabit Ethernet will drive growth in 1999. However, in August PMC-Sierra's stock was adversely affected by concerns over July bookings. We expect the September quarter to be seasonally weak and do not consider this to be a fundamental problem. Nevertheless, we are uncertain about how investors will react to a book-to-bill in the vicinity of 1.05-1.07, which is what we are projecting for September. Level 1 We reiterate our Buy rating on Level 1. * We expect the company to announce a book-to-bill of 1.10 or better. * We believe that single transceivers continue to be strong in fast Ethernet, and that the transition to quads continues to be pushed out. We believe that this will be in Level 1's favor as the company dominates in shipments of single transceivers. Applied Micro Circuits Corp. We note that AMCC has the lowest P/E of the four stocks mentioned, at 29.9 times next 12 months estimated earnings. We reiterate our Buy rating on AMCC. * We have really good visibility for AMCC's revenues due to an end-of-life Raytheon order, which will be spread over the next 4-6 quarters. * We are confident of a book-to-bill ratio of 1.15 or greater in the September quarter. related to the same Raytheon order. Raytheon booked $8.6 million last quarter, and we expect a similar figure to be booked in the September quarter.