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Technology Stocks : Brightpoint - CELL -- Ignore unavailable to you. Want to Upgrade?

To: Paul Shread who wrote (1065)	10/20/1998 3:00:00 PM
From: Grabs	Respond to of 1999

Found this research article on CELL from JW Genesis (don't know much about them), published today. Looks like a solid buy recommendation. JWGenesis CAPITAL MARKETS, LLC 909 MONTGOMERY STREET, SUITE 600, SAN FRANCISCO, CALIFORNIA, 94133 TELEPHONE: (415) 677-1500, FACSIMILE: (415) 391-0287 Research Notes INSTITUTIONAL EQUITY RESEARCH www.jwgenesis.com October 20, 1998 Brightpoint, Inc. (CELL $10 1/8) 1997A 1998E 1999E STRONG BUY EPS Est. FY: Jan. $0.51 $0.80 $1.05 (Disclaimers: 1,3) § We reiterate our STRONG BUY recommendation on shares of Brightpoint. Even though the shares have appreciated from their recent bottom, we recommend investor purchase in front of Thursday's earnings announcement. The shares have traded-off sharply since peaking in late April at $21 ¼. The decline came despite solid top-line and earnings growth in both the second and third quarters. We expect Brightpoint to once again demonstrate the strength in its franchise when it reports Q3:98 results. We forecast EPS of $0.20 on revenue of $375 million in Q3:98, compared with EPS of $0.12 on revenue of $243 million in Q3:97 and EPS of $0.17 on revenue of $330 million in Q2:98. § We expect Brightpoint to report substantial sequential strength in its sales into the Asia/Pacific region and into Europe. As investors will recall, sales into these markets were capped last quarter by management's attempt to remove intermediaries from the channel. This strategy not only introduces new disciplines to perilously fragmented markets, but also supports higher marginal profitability for the company. This strategy should yield sequential revenue growth on the order of 30% plus in the Asia/Pacific region and 10% plus in Europe. § Clearly, the shares have not kept pace with the company's fundamental performance. We attribute this to three factors: the company's exposure to international markets; the company's operating model, which has little margin for error; and the constraints the company's rapid growth has put on its cash flow. Nevertheless, the company continues to post record revenue and profitability.

To: Paul Shread who wrote (1065)	10/20/1998 3:05:00 PM
From: Grabs	Read Replies (1) \| Respond to of 1999

Also found this market comment from Dillon Read on telecom spending in Asia. While CELL is not mentioned specifically, I thought it would be of interest: Warburg Dillon Read LLC October 20, 1998 Nikos Theodosopoulos (212) 821-6951 Scott W Searle (212) 21-3468 Jeffrey A Schlesinger (212) 821-4715 Joseph Wolf (212) 821-5150 HIGHLIGHTS FROM WDR GLOBAL CONFERENCE CALL Summary: Warburg Dillon Read hosted a conference call yesterday focusing on general macro-economic trends and telecom infrastructure spending in China. We believe that the 8.0% GDP growth rate set by the government has a good chance of being met. The main driver has been increased infrastructure spending in the face of a slowdown in domestic Chinese demand and exports. The WDR estimate of 5% GDP growth in 1999 will most likely be revised upward. In terms of telecom CAPEX, we expect $22 billion in spending in 1998 up from $15 billion in 1997. We further expect CAPEX to be up 25% in 1999 to about $27.5 billion. Highlights: Despite economic turbulence in Asia region, we expect 8% GDP target to be hit in 1998. With GDP growth for the year at 7.2% at the end of the third quarter, expect that the Chinese government target of 8% for the year is within reach. We see no reason to doubt the government claim denying devaluation in 1999. Despite recent speculation to the contrary, we do not see a devaluation in the cards for the Chinese currency in the remainder of 1998 or in 1999. We expect a nominal 4% depreciation of the currency next year. Regulation 405, which bans C-C-F, investment to have little effect on CAPEX. While the Chinese government has recently banned Chinese-Chinese-Foreign investment, the overall impact to telecom spending will likely be small as only the relatively small carriers Unicom and Great Wall will be impacted. The government-owned telecom concern MII and China Telecom Hong Kong which make up the bulk of spending should not be impacted. Since Unicom and Great Wall were planning to launch CDMA in 1998, however, we believe this decision will delay CDMA deployment by at least one year in China. Telecom CAPEX to increase 25% in 1999 Overall capex grew 38% from 1996 to 1997 and we look for an additional 46% in 1998. With current 1998 spending expected to reach $22 billion, we see 25% growth to $27.5 billion in 1999. Currently, 50% of all spending goes to local companies with the remaining 50% being spent on the purchase of foreign made equipment. Analysis: GDP Target Likely to be Met The use of 5 year planning cycles has allowed the Chinese government to accelerate planned projects, and quickly see the results of increased infrastructure spending. This is the third year of the ninth 5-year spending plan. The details and intense planning inherent in the Chinese budget process makes the use of fiscal measures easier than in most other economic environments. Essentially, the government just advances the time-line for already budgeted projects. Thus, the third quarter of 1998 saw GDP growth of 7.6% year over year and 7.2% year to date. We expect the fourth quarter to outpace the third, and that strong growth will continue over the next 12 months. Obviously, our 6% estimate for GDP growth for 1998 for the year needs to be revised upwards. The likelihood of attaining the 8.0% growth target by the government seems within reach. Our estimate for 5.0% growth in 1999 will also likely be revised upward.