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

To: Chuzzlewit who wrote (2222)	2/4/1999 1:15:00 PM
From: Beltropolis Boy	Read Replies (1) \| Respond to of 4710

I'm new to VTSS (bought in Monday). Can anybody bring me up to date on what I should be watching here, and what the major concerns are. I'm not an engineer, so please keep it simple. chuzz! welcome aboard! too bad you didn't join us in early oct <vbg>. mind elaborating from whence you came? cf. TLAB? or perhaps via one of those tangible numbers (e.g., free cash flow and/or CAGR)? while i'm not a telecom toolie, here are a couple of tech-oriented considerations ... as you may know, george gilder has previously forecasted that GaAs will eventually succumb to SiGe (germanium doped silicon). most of the evidence is to the contrary: GaAs is still too difficult for many companies to master due to the inherent instability of arsenic which causes threshold voltages to vary across the wafer, thus lowering yields. and unlike silicon, a high percentage of the cost for GaAs is the wafer itself (another reason i like semi-equip automators like PRIA - what fab worker wants to drop a $2 mil twenty-pound wafer on their toe?!), so the barrier to entry isn't insignificant. in addition, as you can imagine, VTSS has its own proprietary manufacturing technologies, yet utilizes industry standard fab equipment (e.g., standard AMAT metal- and chemical-vapor deposition equipment). SiGe promised equal to better performance at cheaper costs, but production hasn't bared that. proponents of SiGe say they can get all the individual transistor speed of GaAs, but with far less noise, much higher uniformity of performance across the wafer, and greater thermal conductivity. we'll see ... another notion to contemplate: VTSS exhibits classic symptoms of guilt by association. for example, it's often lumped in with the legion of other GaAs chip makers like anadigics, alpha, celeritek, remec, and triquint, so when these companies dip, VTSS has been known to slide too. however, these outfits sell linear low-noise, high gain GaAs chips for the wireless cellular handset and infrastructure market; VTSS, on the other hand, sells high-level integration digital GaAs chips for the data- and telecom, and networking markets. in short, they all use GaAs, but VTSS participates in a different market and sells different chips. from a business perspective, two customers, lucent and schlumberger represented 23% and 15% of sales, respectively, in FY98, up from 20% and 12%, respectively, in FY97. i guess you can read that both ways. also, as you may know, VTSS's tax rate is increasing. in FY97, VTSS paid a 10% tax rate due to large operating losses carried over from earlier years of R&D. FY98 was a mix -- overall paying taxes at 20%. according to tomasetta, FY99 should be in the low 30%. hope this helps, -chris.