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Technology Stocks : CYRIX / NSM -- Ignore unavailable to you. Want to Upgrade?

To: Allen Furlan who wrote (31423)	4/11/1999 5:41:00 PM
From: FJB	Read Replies (1) \| Respond to of 33344

I found it interesting that only half of their employees are located in the States. At May 31, 1998, National employed approximately 13,000 people of whom approximately 6,500 were employed in the United States, 1,700 in Europe, 4,600 in Southeast Asia and 200 in other areas. Here are the comments by the Frank Jennings in Barron's who manages the best performing fund over the last five years in the "global flexible" category according to Lipper Analytical. Q: You said you like small-caps because they're cheap. Please explain. A: I'm a M-U-L-D investor. I look for Massive Upside potential and Limited Downside risk. I like situations where if the coin lands heads up, you make a lot of money in the stock, and if it comes up tails, you won't lose too much. These stocks obviously are hard to find. By their very nature of having limited downside, they tend to be unpopular. If you think of a stock as being just like a bond, it has an implied interest rate. There are many small-cap stocks with implied rates of 15%-20%, whereas megacaps have implied rates of only 2%-3%. The obvious opportunity is in the little guys. Q: How's your performance this year? A: Oppenheimer Global Growth & Income is up about 7% year-to-date, but enjoys the best five-year record in its Lipper category, global flexible. Currently, I'm invested 85% in stocks, with 50% in the U.S. and 29% in the U.K.; 11% in bonds, Latin American Bradys, where I see pretty massive upside, and some dollar-denominated Thai and Korean bank paper; and I hold 4% cash. Q: It's time to pick stocks. A: I have owned Qualcomm for over three years. When I bought it, people said their CDMA technology for cellular phones didn't work. We checked out CDMA, which stands for code division multiple access, and it works. So well, in fact, that on March 25, Qualcomm settled a longrunning patent dispute with Ericsson, which wanted to make GSM the global standard and didn't want to pay large royalties to Qualcomm. Now they and everyone else will. CDMA technology has become the world standard for cellular phones. It will be in all handsets, and in wireless local loops, which are local phone systems without wirelines. Cellular telephony still has vast potential. Soon e-mail will be available on cell phones. You'll also be able to surf the Internet on one. People will want Web appliances in their cars. Q: What's so good about CDMA? A: It allows a lot of cell phones to operate in the same place at the same time without interference. It provides more capacity per cellular system. This is especially critical in transmitting wireless data. Q: Qualcomm soared to $155 a share recently, from $87 on March 24, then eased. How much more is there to go for? A: Three weeks ago, its market cap was $7 billion, up from $4 billion a few months ago. Earnings should grow very strongly for many years. Qualcomm in time could become a big-cap, which I define as $100 billion. It has massive upside potential. It would be crazy to sell it now. Q: Next? A: Instead of going up recently, National Semiconductor has gone down. It recently hit a 1999 low of 9 1/8, against book value of $10, but is selling at only 0.8 times sales. Its balance sheet is okay. NSM is one of the most operationally leveraged companies in its business, and its earnings quickly would reflect a cyclical upturn in the semiconductor cycle. The chip industry has been in a three-year recession that may be at a bottom. NSM's biggest business segment is in the analog mixed-signal area, which is a bridge between analog and digital. Briefly, NSM makes chips for two types of Web appliances. One provides computerless access to the Internet for cable-TV subscribers. The other is a stripped-down computer whose only function is to reach the World Wide Web. NSM is a return-from-the-grave story. It has lost money over the past four quarters, and will again in the three months to May 31. This is like buying Chrysler in 1981 before it turned around. NSM has been restructuring itself over the past five years, and has invested heavily during a declining semiconductor cycle, especially in the Web-appliance business, where its chips compete with ones made by Intel and Advanced Micro Devices. Q: What kind of event could turn NSM's stock around? A: I think the cycle is turning now. The stock won't turn until some good news comes out. Q: Like what? A: The announcement of a big contract for chips for Web appliances. I don't know when that might be. But when the stock does move, it could run like Qualcomm did.