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Technology Stocks : Orckit (ORCT) -- Ignore unavailable to you. Want to Upgrade?

To: savolainen who wrote (1559)	10/26/1998 9:33:00 AM
From: John F. Dowd	Read Replies (1) \| Respond to of 1998

Dear sav and daniel: The difficulty with revenues is to know when a shipment is recognized as revenue. It is the same problem as some people were scratching their heads about concerning new shares. When the issuance of shares or the sales of product span the end of the qrtr. the numbers cannot be realized until the receivable is posted on the books in the case of sales or when the shares are registered to new owners in case of new shares issued. Without more cooperation from the company it is hard to determine when a line card shipped is booked as a sale. In the case of many hi tech products a certain burn in time is required if the contract call for same before the product is accepted. The bottom line is, when are these guys going to be able to show 50% gross margins? That seems to be the critical mass for a successful ongoing chip mfr. Until they do that they will be under a cloud of suspicion of having low balled their way into the game and not being able to produce a profit to stay in. Indeed that is why the big boys like secondary and tertiary suppliers. John

To: savolainen who wrote (1559)	10/26/1998 5:21:00 PM
From: Daniel Ralls	Read Replies (1) \| Respond to of 1998

Analyst estimates for 4th qtr. eps revs Firm 4Q98 1Q99 4th 1Q99 price target Lehman -.35 -.09 15.5 n/a $25 Montgom Sec. -.38 n/a 16.0 n/a n/a Josepthal -.36 n/a n/a n/a $22 Oppenheimer -.36 n/a n/a n/a n/a BT Alex Brown -.39 n/a n/a n/a n/a I guess these analysts are having the same problems figuring out future revs as we are! What usually happens is these analysts update twice during the qtr and this is when they put out revenue estimates. The Josepthal analyst had an interesting point. He figures that with every additional $5MM in new orders (during 99) will translate into $0.04 per share. From this I get a Net Profit Margin of 13.33% (5/16.8 million shares = .30 .... .04/.30 = 13.3) Figuring out Gross Margins is alot harder, since I don't know what the SG&A,R&D, Interest figures will be. I'd be afraid to even guess on those. RE: SBC...SBC made a 4% investment in Concentric Networks (CNCX) recently. I don't know if this could affect any ORCTF/SBC deal, though. Also, I read were Cisco sold 1000 DSLAM's to US West. Doesn't seem like alot but maybe US West will start looking at second/third suppliers as well.