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Technology Stocks : Vari-L (VARL) -- Ignore unavailable to you. Want to Upgrade?

To: JakeStraw who wrote (854)	1/27/1999 12:44:00 PM
From: QuietWon	Respond to of 2702

Not entirely impossible, but UNLIKELY imho as: (1) VARL like an electronic contract manufacturer in a sense ie. LU/MOT 'outsources' manufacturing of the components to VARL (2) similar to a few other co's (eg. MMCN), VARL provides product to a # of co's and those co's will either start doing what VARL does or they'll keep VARL at a distance and put pressure on VARL for good pricing

To: JakeStraw who wrote (854)	1/27/1999 1:31:00 PM
From: Robert Sheldon	Read Replies (1) \| Respond to of 2702

MOT just finished spinning off its VCO & PLL unit to another company. MOT as well as much of the industry is moving away from producing these types of components in-house. In other words, MOT is not likely to bid for VARL. LU is another issue altogether. You may have noticed that VARL sells components to a variety of 'blue-chip' companies. VARL has stated in interviews that they believe they now sell over 90% of VCOs for the base station market. This is primarily due to nudging two Japanese competitors out of European contracts. At this time, the majority of VARL's sales come from infrastructure (components for base stations and the like). It is very unlikely that VARL would maintain their tremendous market share if LU were to take them over due to a loss of customers who would not want LU to be privy to their production plans. This brings us to one of VARL's quirks: Due to confidentiality requirements, VARL has had a rough go of it where announcing new contracts are concerned – in the current climate no one wants to show their hand. Fortunately, we can rest fairly easy in knowing that VARL has maintained their pricing power in the base station market, and the growth of this market is estimated at 17% to 20% by most analysts over the next three years. Unfortunately, for this year anyway, dilution from a convertible offering with warrants a while back will negate per share earnings growth in this area. BUT! The subscriber (pagers & handsets) business could be a real positive. If they successfully (5mm to 10mm pieces of production) break into this area in 1999, earnings should rapidly increase. It is reasonable to expect that this will occur due to the superior performance and competitive pricing of VARL's components. Pending quote/contract activity with very high probably include (million piece orders) Nokia – Next generation handsets MOT – Iridium contract follow on order Samsung - Next generation handsets Unknown – LMDS/Internet application (rumor & innuendo) Wireless Access – follow on order(s)