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To: Clarksterh who wrote (17689)	11/4/1998 9:32:00 AM
From: Webster	Read Replies (1) \| Respond to of 152472

Clark your first sentence sums it up: .."this conference call was one of the oddest I've ever heard". Gross Margin discussed by JP Morgan as if he was disappointed by Q's exceeding his estimates. I totally agree. Although he didn't say he was disappointed you could feel the climate as if he were saying why didn't you give us some indication of this earlier. Good point Web

To: Clarksterh who wrote (17689)	11/4/1998 12:02:00 PM
From: bananawind	Respond to of 152472

Clark, All... Thoughts on CC and Analysts As Clark and others noted, the tone of the CC was somewhat strange. It seems to me that the analysts are in a state of high agitation and are even more short-term oriented, if that is possible, than normal. This probably reflects the very real prospect of layoffs across the industry, as well as their customers [read funds and other large institutional accounts] turning up the screws in their own ridiculous quarterly horserace. A good example of this was the margin questions. They were definitely surprised at the magnitude of the improvement (24% to 29%). None of us should have been, since Gregg Powers has patiently explained many times how the combination of infrastructure reaching break-even, coupled with operating leverage from higher handset and ASIC sales, would have just this effect. But rather than try to understand the dynamics of the business, the analysts yesterday were practically begging management to just (please, pretty please) tell us that 29% will be the number next quarter. Well, Q has lots of moving parts and it just doesn't work this way. That is why management tried to explain that they plan and expect to improve margins in every business line, but they cannot and will not say that they will be better (or the same) over the next 90 day period. Strong handset sales in the Christmas quarter could actually reduce the overall average gross margin. Besides agitation and short term orientation, they have also got to be embarrassed and somewhat regretful that they were not pounding the table at $39 a few weeks back. "Sheesh, couldn't you have tipped us off you were going to have a great quarter? Now, after a 50% upside move, I've got to go out and tell my clients this is a great buy, but I still can't tell them what next quarter's eps or margin will be." Yes, they are frustrated. The Merrill guy was practically pleading with Irwin to tell him exactly when the squabble with the Koreans would be over and how much could the exposure be. Of course, Irwin does not know the answer to those questions and rightly told him we are working on it, we don't think it is material, and we are very, very comfortable with our level of reserves. Yet it was clear this did not satisfy the guy. As Gregg has told us, Dr. Jacobs does not BS his fellow investors. He tells it straight and then does his level best to execute. That is the attitude that I sense from management in these conferences, and I believe it is a credit to them and a benefit to the shareholders (as opposed to the traders, which, unfortunately, includes most of the funds as they are currently managed). Bottom line - it was a great quarter and there will be many more to come. If the business dynamics don't lend themselves to short-term predictability, then so be it. Those who cannot see past the next 90 day will have to miss the ride. Too bad. -Jim

To: Clarksterh who wrote (17689)	11/4/1998 12:13:00 PM
From: bananawind	Read Replies (1) \| Respond to of 152472

A comment on ASP's. The analyst questions on ASP's also struck me as ill-informed and pleading. Although management repeatedly told them lower ASP's are part of our business plan, they just did not seem to get it. It was almost like they are unaware of other successful high tech businesses that have had similar economics, or that it is the lower ASP's that are going to help expand the market and stimulate demand, or that component costs are declining at the same time. -Jim