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Technology Stocks : Neomagic Corp. (NMGC) -- Ignore unavailable to you. Want to Upgrade?

To: Eddie Kim who wrote (2565)	2/18/1999 9:09:00 PM
From: Fred Fahmy	Respond to of 3645

CC very upbeat, IMO. Many congratulations from the analysts. Some highlights below: - NMGC identified 106 new notebook models released last quarter with NMGC in 70 of them! 32 with 128 and and 38 with 256 (I could have the 32 and 38 reversed). - Management was very confident that they are very well positioned vs. the competition. - They consider ATT only a player at the high end (high end being 10% or less of the market) where size and battery life aren't as important. They consider Trident the only other real competitor and they are only at the very low end. - They see the overall notebook industry growing in the high teens to 20 this year and around 25% next year. - They expect to GAIN market share again this year. - Forward looking blended ASP (which takes into account mix) decline was given at -7% and in line with previous guidance. - Current notebook business opportunity is sized at $1 billion. They see DVD opportunity at $3 billion and digital camera at $2 billion. - Revenue should be up slightly sequentially. Margin will be down slightly from 39% to 38% plus or minus 1. Depending on currency they could hit high end of guidance. (Note: sounds to me like EPS is likely to come in at about the same level for this quarter, i.e. 0.34 which is right were the current estimates sit). - Full year tax rate guidance was given at 33%. - Both acquisitions to be cash ONLY (i.e. no new stock issued) according to company. Extra headcount from acquisitions is approximately 26 (10+16). They will be taking a charge for research in progress. In assessing the charge they will take, they said they were well aware of the SEC cracking down on the aggressiveness of these charges (this came in response to a question). In other words, they will be conservative with the amount they write-off to be sure that the SEC has nothing to object about. - Their best guess at the margins for the new business are as follows: For DVD products they see margins consistent with their current long term guidance for notebook products, i.e. 37-40%. They see digital camera products in this range also with some upside potential. Overall, the guided the analysts to use the same long term margins rates as they currently use for the notebook business (37-40)for the overall business in FY 2001. I encourage everyone to listen to the call for themselves. 1-800-633-8284 code #11415975 This management team really seems on the ball to me. Notebooks, DVD, and digital camera's are three of the fastest growing segments in the tech industry. If they continue to execute as they have in the past this stock will eventually get to fair value and the Street will have to take notice.....that's if someone doesn't come along and try to buy them out first. Good luck to all, FF

To: Eddie Kim who wrote (2565)	2/18/1999 9:12:00 PM
From: Jerry S.	Read Replies (1) \| Respond to of 3645

ALL PLEASE READ: You can't just look at the bottom line # (which, after all, met expectations) and not look deeper within. Top line growth year over year was 93%, 61% this Q vs. year ago Q, and 7% over previous Q. Net Income was 45% greater than prior year, despite R&D doubling and the income tax rate more than doubling. R&D expense is not something one would penalize a company for. I think that the whisper #'s may not have taken the stepped up R&D into consideration. The company is also showing agressiveness in their pushing into the DVD & digital camera arenas, showing that they will be diversifying their product line - a smart move. They are acquiring technolgy. And how do they do it? With cash (no wonder where that came from) and with warrants to purchase at $20 dollars! Now is that confidence or what? And the selling company thinks that's a bargain. The bottom line is that NMGC has and is proving that they are strong growing firm for which its' stock absolutely deserves multiples far greater than which is now bestowed (11 p/e? give me a break!) For all who think that the 4Q #'s may negatively affect the price tomorrow, please read an excerpt from this article: The Edge Feb 18 1999 4:08PM CST Archives... Neomagic Corporation by Kimberly Haley-Coleman Senior International Markets Analyst In a quarter which marks the completion of their second full year as a public company, Neomagic Corporation {NMGC:NASDAQ} today reported after the close of trading net sales for the fiscal year ended January 31, 1999 of $240.5 million, an increase of 93% compared to net sales of $124.7 million for fiscal 1998. Net income for fiscal 1999 was$31.2 million, or $1.19 per diluted share, compared to net income of$20.8 million, or $0.82 per diluted share in fiscal 1998. Fiscal 1999 net income of $31.2 million reflected an effective tax rate of 34%, whereas fiscal 1998 net income reflected an effective tax rate of 15%. In each of eight successive quarters the company has delivered higher revenue, higher profits, and higher market share, all of which combines for a high probability that the stock will gap up at the open Friday morning. The stock opened today at $14 a share and closed at $14.125 on about average volume of over 600,000 shares.