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To: view who wrote (2306)	1/27/1999 6:11:00 PM
From: DiViT	Read Replies (1) \| Respond to of 3493

Congrats Steve on your prediction. Nice to see a profit. Cube cautioned about the next two quarters saying Q1 will be flat and Q2 will be flat. Current GM 54% predicting a 1% decline is possible in Q1/Q2. They got dropped 20% the next day (unwarranted in my opinion) Will be interesting to see if the street reacts the same with ESS. If they do, I would also think it unwarranted.

To: view who wrote (2306)	1/27/1999 6:26:00 PM
From: Synapsid	Read Replies (2) \| Respond to of 3493

I wonder what is causing the low gross margins? Possibilities include PCI audio chips (decreasing ASP, Maestro-2 and Solo chip may not be the most cost-effective audio chips around, manufacturing-wise), and older VCD sales, as well as non-existent margin on most modem products. Also, it has been reported on this thread that ESS was seeing more demand than it could supply for both certain audio and video products, which could have caused expediting charges. I'll listen to the cc. As for the stock price, the short-term outlook is healthy although not earth-shattering, but they are increasing their credibility after four quarters of losses.