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

To: OldAIMGuy who wrote (1787)	10/5/1998 7:29:00 PM
From: MoonBrother	Respond to of 4710

Analysts' Latest Comments. No business weakness seen for VTSS what-so-ever! Hanging in there guys/gals. VTSS WILL start to recover any minute now! Good luck! ----------------------------- 03:11pm EDT 5-Oct-98 Montgomery Securities (J. Joseph 415 627-2925) VTSS Semiconductor Industry Earnings Preview (Part 1 of 9) NATIONSBANC MONTGOMERY*NATIONSBANC MONTGOMERYNATIONSBANC MONTGOMERY SEMICONDUCTOR INDUSTRY EARNINGS PREVIEW (PART 1 OF 9) October 2, 1998 Jon Joseph, CFA (415) 627-2925 Clark Westmont, CFA (415) 627-3160 Doug Lee (415) 627-3193 Research Brief Kurt Lanzavecchia (415) 913-5723 Bill Lyman (415) 913-3644 DJIA: 7632 S&P 500: 986 NMSGI: 95 Conference Call Quarterly EPS Report Time NMS FC Date Time# Ticker Rating Date (PDT) Est. Year Ago Consensus VTSS EPS upside likely, book-to-bill ratio around 1.15-1.20. Semiconductor Overview: PC Sector Overview With the question of an inventory rebound behind us, we are now looking to see if the personal computer segment continues to demonstrate seasonal momentum, which we believe it does. That is the basis for our recommendation on Intel (INTC, $83-7/16, BUY), with a price target of $100, and Advanced Micro (AMD, 17-5/8, BUY), with a price target in the mid-high $20s. Even so, it is difficult to see a significant acceleration in the personal computer market from the current low-teens growth rate if capital spending in the U.S. and Europe are to be trimmed due to lower earnings growth. On the supply side, the news continues to be favorable with nearly daily news that another semiconductor company is pushing plans for expansion. Already, firmer DRAM pricing appears to be having a positive impact on other component prices, including commodity logic, some low-end analog, some low-end programmable logic, and some discretes. Over the longer term, strong demand and further DRAM industry consolidation in Japan and Korea should be a positive for Micron (MU, $27-1/8, BUY), with a long-term price target of $45 and ultimately for the semiconductor group as a whole. o Intel's upside surprise this quarter and the profit warnings from a number of telecom companies have characterized the split personality of the current quarter: demand in the PC segment has picked up both from an inventory rebound and seasonal factors, even as demand has slowed in some communications sectors. o That forms the basis of our recommendations this quarter, with a focus on PC-centric companies like INTC, MU, and SMTC, and power management component suppliers like MCRL and POWI. Despite the apparent slowing in the broader telecom sector, we believe demand for broadband components used in SONET (optical fiber) and WAN applications remains healthy. Companies which benefit include AMCC, VTSS, PMCS, and TXCC. o Clearly, the number one concern for investors going into 1999 will be the state of the European and U.S. economies. If we see a significant slowing in those economies, the current semiconductor sector recovery will likely be slowed. We note, however, the worst downturns in the semiconductor sector have come about not because of recessions, but because of excess capacity. That capacity is now in an absorption mode. VITESSE SEMICONDUCTOR, INC. RATING: BUY Price: $20 NASDAQ: VTSS Vitesse is a leading supplier of digital and mixed-signal integrated circuits (ICs) based on a proprietary high integration gallium arsenide (H- GaAs) process. The company's components are critical elements of high performance equipment in several high-growth markets, including telecommunications, data communications and automatic test equipment. Current Qtr. Year Ago FC Consensus EPS $0.20 $0.13 $0.20 Revenue ($ millions) $53.0 $30.8 1997 1998E 1999E Fiscal Year EPS (9/30) $0.43 $0.66 $0.82 Calendar Year EPS $0.36 $0.61 $0.88 We expect Vitesse to post a typical good quarter, with good upside to Street expectations and report a book-to-bill ratio north of 1.15. Total backlog should be well north of $90 million, so the company's visibility remains among the best in the industry.

To: OldAIMGuy who wrote (1787)	10/5/1998 7:33:00 PM
From: MoonBrother	Respond to of 4710

One more piece ---------------------- 08:25am EDT 5-Oct-98 Prudential Securities (H.MOSESMANN 414-395-2627) INTC VTSS SEMICONDUCTORS: EARNINGS PREVIEW FOR QUARTER ENDING SEPTEMBER 1998, PART 1 OF 2 INDUSTRY: EARNINGS PREVIEW FOR THE QUARTER ENDING SEPTEMBER 1998, PART I OF II R E S E A R C H N O T E S October 5, 1998 Subject: Industry Earnings Preview OPINION ========= Analyst: Hans C. Mosesmann (415) 395-2627 Current: ACCUMULATE Ali Far (415) 395-2626 Prior: Alex Gauna (415) 395-2624 RISK: High ============================================================================= While there is clear evidence of robust PC-related semiconductor component demand, it is masking the sluggish demand picture for the rest of the industry. To add insult to injury semiconductor manufacturing overcapacity is still running at 30-40%. In general, we view a return to supply/demand balance in semiconductors to be mid-1999 best case. A more likely scenario places this balance at the end of 1999. The September 1998 Quarter, Close To An Extended Bottom. We believe we are relatively close to an extended bottom in the semiconductor industry given that the "analog" companies are finally experiencing their fair share of bookings deceleration. Analog pure-plays (which Prudential does not cover at this time) are usually the last to slow down in semiconductor market cyclical downturns. The "digital" companies felt the bookings impact earlier in the year. With the analog and overcapacity picture understood (at least from a historical basis), we must turn our attention to demand. Clearly, the revised growth estimates from companies in the communications end market will play a key role in "extending" the bottom for many semiconductor companies. With the exception of Intel and AMD, all semiconductor companies have at least a 30% exposure to communications. A Surge In Bookings Activity For Electronics Brokers At Quarter End. Electronics brokers (non-franchised distributors) are good leading indicators for semiconductor business trends. Late in September, the electronic broker channel experienced a significant across the board surge in orders. Orders this year did not exhibit the traditional post-Labor day pick-up and had been sluggish for most of the month While this is a good development, at this time we believe this is no more than an inventory replenishment surge rather than a fundamental shift in demand. Our Favorites (Strong Buy): INTC (Select List), VTSS (SBI), CY Our Strong Buy recommendations all have excellent upside earnings potential in the near-term. Recently added to the Prudential Select List, we believe Intel is the best way to play the strong PC market environment. Vitesse's exposure to the very high-end fiber communications systems insulates the company from the more mainstream slowdown pervading that market. Cypress streamlined manufacturing infrastructure has significantly reduced the company's break even level and new product momentum is excellent. (VTSS - 19 3/4) $0.13 $0.20 $0.20 30 Mid Oct. Strong Buy(SBI) Vitesse We believe Vitesse will meet or exceed our September quarter 1998 earnings estimate of $0.20 (Street consensus). The stock has been pummeled recently as a result of the apparent slowdown in the telecommunications end market. In our view, Vitesse is a play on the very high-speed high density IC communications market place where its products are used exclusively in high end fiber communications standards such as OC48 and OC192. Key issues include the successful ramp of the Colorado Springs fab and the inevitable decline in the book-to-bill ratio as this fab meets pent-up demand. We expect the automatic test equipment (ATE) portion of the company's revenues to decline as a percentage of revenues going forward. Vitesse is a bandwidth story.

To: OldAIMGuy who wrote (1787)	10/5/1998 7:38:00 PM
From: The Ox	Read Replies (1) \| Respond to of 4710

I only picked off a few shares at 18 1/4. I almost loaded the boat, then backed off. OT: I have been very fortunate over the last 2 months and have done very well in an extremely lousy market. I bought gold mines a month ago and dumped last Friday. Today, gold was going down with the rest of the market on fears that the Euro's would sell gold. I have been taking smaller then normal positions due to the market turmoil. Moved from 95% stocks to 50% during July/August. I still think caution should be the investor/trader's buzz word for the rest of the year. Best of luck, Michael