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Technology Stocks : C-Cube -- Ignore unavailable to you. Want to Upgrade?

To: John Rieman who wrote (40038)	4/21/1999 3:13:00 PM
From: Bob Strickland	Read Replies (1) \| Respond to of 50808

Excerpt from BANCBOSTON ROBERTSON STEPHENS report... Source: BANCBOSTON ROBERTSON STEPHENS Date: Mar 2, 1999 Title: C-Cube Microsystems Author: Chanda, A., et al Companies: c-cube microsystems inc. Location: CALIFORNIA (STATE OF) -------------------------------------------------------------------------------- Full Text: COPYRIGHT © The Investext Group. 1996 March 2, 1999 C-CUBE MICROSYSTEMS Makes Presentation at the BRS Conference C-Cube Microsystems, Inc. Industry: Media Infrastructure CUBE $18.56 3/2/99 CHANGE IN... Yes/No WAS IS ...Rating: No BUY ...EPS 1997A: Actual $1.10 ...EPS 1999E No $1.22 ...EPS 2000E: No $1.31 52-Week Range: $31-$13 Shares Outstanding (MM): 41.5 Market Cap: $770.3 Avg Daily Volume (000): 873.0 12/98 Bk Value/Sh: $5.98 12/98 Tot Debt/Tot Cap: 11% 1998 ROAE: 22% Price/Book Value: 3.1x 12/98 Net Cash/Sh: $4.40 Dividend/Yield: $0.00 0.00% 3-Yr Sec Growth Rt: 25% FYE: DEC 1998 1999E 2000E EPS: 1Q $0.27 $0.32 $0.32 2Q $0.25 $0.29 $0.30 3Q $0.28 $0.29 $0.32 4Q $0.31 $0.32 $0.37 Year $1.10 $1.22 $1.31 P/E - 15.2x 14.1x Rev ($ M): 1998 1999E 2000E 1Q $87.3 $98.0 $109.0 2Q $82.5 $96.0 $109.0 3Q $86.2 $100.0 $115.0 4Q $95.8 $108.0 $125.0 Year $351.8 $402.0 $458.0 EqtyMktVl/Rev 1.9x 1.7x Key Points: * C-Cube made a presentation to investors at the BRS Technology Conference last week. The company has two major business segments: the DiviCom system division, focusing on digital video networking, and the traditional semiconductor business, the consumer and set-top silicon businesses. The company expects the semiconductor business to improve incrementally in 1999 with significant revenue growth for DiviCom. * DiviCom is the only open architecture digital video networking solution available, targeting satellite, cable, telecom and broadcast markets. The segment is growing at 30%+ and expanding geographically into Europe, Asia & Latin America. * The semiconductor revenues have historically been dependent on the Chinese VideoCD market, where the company has an impressive 60% market share. As new markets begin to take off in volume, the ASP pressure in the VideoCD market should be offset by revenue growth from the new digital video IC markets such as digital VCRs, DVD, digital camcorders etc. Among the new opportunities are integrating video/audio for DVDs and integrating MPEG codec/communications for set-top boxes. THE COMPANY: C-Cube is a leader in the fast growing market for integrated circuits that implement MPEG standards for the compression and decompression of digital images and video as well as system products for digital video networking under the DiviCom division. C-Cube is a market leader in the shipments of MPEG-1 decoders and MPEG-2 encoders as well as among the leaders in shipments of MPEG-2 decoders. Systems using C-Cube products include Video-CD machines, video encoding stations, PC video decode boards, digital satellite set-top boxes and digital head-end transmission systems among multiple other applications. OUR INVESTMENT THESIS: C-Cube has staked out a leading position in the emerging market for digital video compression and decompression ICs. As these markets develop fully and the company executes its product plans successfully, we believe that C-Cube has an opportunity to continue its rapid revenue and earnings growth. Our investment thesis on the stock is based on the following: 1. Digital video, in our view, is a powerful value proposition. Although digital video is still in its infancy, we believe that the IC opportunities in this market have huge potential. C-Cube is experiencing solid and sustained growth by servicing select target markets within the digital video industry. 2. C-Cube has grown rapidly from the booming market for Video-CD products in Asia. We believe that the company is well positioned to continue to extract cash from this very large, but now slowly growing business. 3. Two new digital video markets are rapidly taking shape -- satellite set-top boxes and Digital VideoDisk (DVD) players. We believe that these markets could emerge as important contributors to revenue growth during 1998. 4. DiviCom is an integral component of the C-Cube franchise that is poised to build upon its technology lead as they begin to deploy new product cycles. 5. We believe C-Cube is run by a very capable and forward looking management team, which we view as instrumental in leading the company to execute toward our expectations. INVESTMENT RISKS: Among the risks is the potential for increased competition in the company's current markets, which could lead to price pressures. Also, the consumer electronics markets exhibit rapid product transitions and can have very short product-life cycles. Many of the company's new market opportunities can feature seasonality or ramp-up cycles that could change dynamics from time to time. BancBoston Robertson Stephens maintains a market in the shares of C-Cube Microsystems Inc. and has been an underwriting manager or comanager or has privately placed securities for C-Cube Microsystems Inc. within the past three years. Unless otherwise noted, prices are as of Monday, March 1, 1999. Daniel T. Niles Dan, a managing director, joined BancBoston Robertson Stephens in 1990 and is a semiconductor analyst focusing on memory, microprocessor, logic, intellectual property, and PC companies. He was previously an associate in the firm's mergers & acquisitions group, and prior to joining the firm, he was an engineer for Digital Equipment Corporation. Dan received a BS in systems engineering from Boston University and an MS in electrical engineering from Stanford University.