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To: Stephen Lux who wrote (11139)	5/4/1999 11:41:00 PM
From: zbyslaw owczarczyk	Read Replies (3) \| Respond to of 18016

Stephen Lux, if you make for example 36170 which cost 300k+$, and you can not ship it b/c small part did not arrive on the time, the cost of producing that specific product is spread on shipped products lowereing artificially margin. However the same product sold next quarter will have near 100% margins. You dod not count cost of production twice. In Q4 margins will be lower, b/c of that, and higher in the following quarters. I hope this will help Zbyslaw

To: Stephen Lux who wrote (11139)	5/4/1999 11:59:00 PM
From: Doug	Read Replies (3) \| Respond to of 18016

Stephen:It is most likely a capacity problem. The Semi Conductor Industry on a global basis has excess capacity and the competition is fierce including near state of the art FPGA's. today, any Silicon component is available from more than one source. One cannot deduce Margins from the announced Sales/Income because the Sales were not optimised for the existing capacity. TDM sales have higher margins but declining orders exceeding plant capacity. ATM sales have lower Margins but increasing sales that do not match the quarterly plant capacity. The problem is how do you optimise Profit for 2 existing lines of production under a set of Customer orders that vary Q to Q.