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Technology Stocks : SBS Technologies (SBSE) - Undiscovered gem -- Ignore unavailable to you. Want to Upgrade?

To: dylan murphy who wrote (684)	10/20/1998 5:55:00 PM
From: Clay Takaya	Respond to of 1540

Well there you have it. IMHO the company is doing great. 1. As that guy Barry from Pinnacle pointed out over and over again, the cash flow is outstanding. Once you strip out the non-cash charges for the current quarter vs. last year you see growth apprx .65/share (or $4 million) vs. .47/share (or $2.8 million). With this kind of real cash flow, the company can build its cash back up fast, even as it buys back stock. 2. SGA and R&D were high, but appropriate for a company gearing up for expansion into Europe. This is expected to remain flat next few qtrs as a percentage of sales, then probably decline after that if sales resume their upward tragectory. 3. Cowen was trashed by Amenson and several other callers for labeling SBSE a value stock "buy" at $20+ and a "hold" at $10. Amenson went so far as to tell Cowen it was doing a disservice to its clients. The general mood of the conference seemed glum and angry for obvious reasons. 4. Modular I/O and the Avionics division are experiencing the slowdown in growth. While the I/O business appears to be based on a slowdown in capital spending in general, the Avionics division could rebound if defense spending resumes after the budget is finalized. 5. Amenson reiterated that the 1999, 1.70-1.85 guidance is extremely conservative and is based on 0 growth in the core businesses. Upside surprises are to be preferred to slicing estimate guidance bit by bit. Next quarter is expected to be flat with this one on a revenue and earnings basis. 6. Possibly most importantly, the stock buyback can start tomorrow. He even hinted at taking the company private at these prices. I don't know if we are going to see a gap-up tomorrow, but I am really glad I bought more of the company at these bargain-basement prices. I hope I have the inclination to thank Cowen next year for creating this kind of opportunity.