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

To: The Ox who wrote (1920)	10/16/1998 8:15:00 AM
From: MoonBrother	Read Replies (1) \| Respond to of 4710

One more analyst's cheering! -------------------------------- 08:15am EDT 16-Oct-98 Credit Suisse First Boston (Trivella, Tom (212) 325-2478) AM Call: First Edition - 10/16/98 - Part 1-5 FBC CREDIT SUISSE FIRST BOSTON CORPORATION Equity Research October 16, 1998 FIRST EDITION ESTIMATE CHANGES Vitesse (VTSS, $24.438, STRONG BUY) Target (12 Months): $35 Charlie Glavin, CFA 415/836-7715 charlie.glavin@csfb.com FY4Q99 Beats Consensus on Broad Strength. Vitesse reported FY4Q99 EPS of $0.21, beating our estimate and consensus estimate of $0.20. Revenue of $54 million was stronger than we expected, and a sequential increase of 17% (up 67% over last year). Revenue strength occurred over all three of VTSS' segments: Telecom (up 22% sequentially), Datacom (up 15%), and ATE/Testing (up 9%). Gross margin improved 60 basis points, reinforcing our belief that VTSS' new Colorado fab is about one quarter ahead of its yield ramp. Further revenue growth and margin expansion is expected, with new designs and orders keeping visibility and backlog high. EPS comparisons are tough due to a change in tax rates, higher share count, and a drop in interest income (due to the recent drop in interest rates). FY 1999 EPS estimate is unchanged at $0.83, but our CY1999 estimate increased to $0.91 (formerly $0.89). We maintain our STRONG BUY rating with a 12-month $35 price target. Annual Prev. EPS EPS 9/99E $0.83 NA 9/98A $0.67 $0.66 PMCS (PMCS, $34.625, BUY) Target (12 Months): $40 Charlie Glavin, CFA 415/836-7715 charlie.glavin@csfb.com Results Beat Consensus; Raising Estimates. PMCS reported 4Q98 EPS of $0.29, beating our estimate and consensus of $0.28 due to continued strength from networking products. This strong growth in the networking business offsets the focused ramp down of legacy products, while residual legacy revenue continues to provide opportunistic margin windfall for funding future product development (especially in ethernet). Promising new S/UNI and EXACT products look to impact 1999 revenue, and other designs and design win activity should also continue to generate sustainable growth. While gross margin is expected to decline from the very high levels of 1998 (above 75%) , as ethernet products ramp into volume, we are increasing our Q498 and 1999 estimates (to $0.30 and $1.34, respectively) to reflect the revenue impact from PMCS's emerging strength in higher level networking products. We maintain our BUY rating with a revised 12-month price target of $40. Annual Prev. EPS EPS 12/99E $1.34 $1.26 12/98E $1.17 $1.16