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Strategies & Market Trends : The Round Table: A work by the squares of the SNDK thread. -- Ignore unavailable to you. Want to Upgrade?

To: Bill Zeman who wrote (55)	3/16/1999 1:48:00 PM
From: Art Bechhoefer	Read Replies (2) \| Respond to of 194

Re: IFCI If you like that part of the communications business, why not also consider Corning (GLW), which is the low cost producer of fiber optic material and equipment. Though the stock has gone up considerably this year, it is still low, in my opinion, because of the stigma that remains from breast implant litigation (for which Corning has virtually no liability). The market for fiber optics is growing so fast that Corning's most recent plant addition has already sold out its production for the year.

To: Bill Zeman who wrote (55)	3/17/1999 8:07:00 AM
From: Ausdauer	Respond to of 194

Bill, I read up a bit more on IFCI. I found IFCI by screening IBD last quarter and the earnings growth has been reasonable. The megatrend is the upgrading being undertaken by corporations, cable companies and telecoms which will include conversion to fiberoptics. IFCI is attractive in that many companies chose local, small, private companies for fiberoptic installations. IFCI offers "one stop shopping" with both fiberoptic installation (maintenance and upgrading), engineering service and networking equipment. This has been accomplished by a series of acquisitions. Based on information from wsj.com I have concluded that revenue growth and net income have grown in step with net profit margins being just under 10%. One time acquisition charges of 900,000 dollars offset Q3 earnings. Of note, shares outstanding have also increased proportional to revenue growth. Thus, as acquisitions procede they are accomplished by issuing new shares. Therefore, revenue growth is propped up by inclusion of revenues from acquisitions. Despite this dilution, net earnings per share should increase by at least 50% in 1998 vs. 1997. Also, as acquisition costs plateau and duplicative services are eliminated, both increases in both the top and bottom lines should follow. The company has already projected revenues of over 100 million dollars for 1998 suggesting that Q4 revenues will reach 45 million dollars. Unless shares outstanding increases significantly that will imply net earnings per share of 15 cents and projected 1998 earnings of about 45 cents. The estimated PE is about 17 or 18, well under the earnings growth rate which is impressive both year over year and sequentially. Thus, I consider IFCI a "growth at reasonable price" play rather than a value play. One discrepancy I found was that wsj.com lists gross revenues through 1998 Q3 as 55 million, while the company state 71 million in the last quarterly report. Has anybody else noticed this? It would imply slower Q4 revenue growth to approximately 29 million dollars and flat quarter-over-quarter earnings of 12 cents. Regarding Mr. Sapp, his holdings along with other directors accounted for 20% of outstanding shares based on the last 14A filing. I am not sure why he is selling his holdings. Perhaps he is elderly and is cashing out his position. Maybe somebody could research this or call IR for a more accurate response. The companies balance sheet looks relatively clean, although they will incur more debt to finance growth in 1999. Has anybody looked at other indices such as book-to-bill ratios? I still think we need to do a bit more homework on IFCI, but I am reasonably comfortable that the bottom is not going to fall out. Disclosure... I have taken a small position in IFCI at prices around 6 to 7 dollars per share. This accounts for 4% of my current equity holdings. Ausdauer