Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Black-Scholes who wrote (40709)	5/9/1999 5:31:00 PM
From: Black-Scholes	Read Replies (1) \| Respond to of 50808

The Chinese protest is hollow sabre-rattling. Nothing more.

To: Black-Scholes who wrote (40709)	5/10/1999 5:15:00 PM
From: John Rieman	Respond to of 50808

Mr. Rieman - There is absolutely NO REASON for companies with exposure to China to trade down. Maybe slightly at the opening and that would be it. This is a "blip" on the screen. China will do nothing to truly harm any trading relationships with anybody - period. China's economic growth is top priority to the Chinese Government. I think the investing community recognizes that simple reality. Good call on the trading action. From C-Cube's 10K................... Forexample, China is the primary market for VideoCD and Chaoji VCD players utilizing the Company's decoder products. As a consequence, any political or economic instability in China could significantly reduce demand for the Company's products. The Company has made a significant investment in additional foundry capacity in Taiwan and is subject to the risk of political instability in Taiwan, including but not limited to the potential for conflict between Taiwan and the People's Republic of China. The Company sells products to customers in Korea and is subject to the risk of economic and political instability in Korea, including the potential for conflict between North and South Korea. In addition, the Company sells certain products in international markets and buys certain products from its foundries in currencies other than the U.S. dollar. As a result, currency fluctuations could, in the long term,have 12<PAGE> 15 a material adverse effect on the Company's business and results of operations. With respect to international sales that are denominated in U.S. dollars, increases in the value of the U.S. dollar relative to foreign currencies can increase the effective price of, and reduce demand for, the Company's products relative to competitive products priced in the local currency. The United States has considered trade sanctions against Japan and has had disputes with China relating to trade and human rights issues. If trade sanctions were imposed, Japan or China could enact trade sanctions in response. Because a number of the Company's current and prospective customers and suppliers are located in Japan and China, trade sanctions, if imposed, could have a material adverse effect on C-Cube's business and results of operations. Similarly, protectionist trade legislation in either the United States or foreign countries could have a material adverse effect on the Company's ability to manufacture or sell its products in foreign markets. The Asian consumer electronics markets accounted for approximately 49%, 55% and 62% of total Company sales in 1998, 1997 and 1996, respectively, and are expected to continue to account for a substantial, though declining, percentage of sales in the future.* The economic crisis in Asia has been characterized by increases in idle production capacity, real estate vacancies, unemployment and bank failures, and has resulted in currency devaluation, falling consumer spending and domestic price deflation. Any of these factors could significantly reduce the demand for the end-user goods in which the Company's products are incorporated. Most of the Company's sales in Asia were of decoder chips, which are used in VideoCD and Chaoji VCD players. The Company believes purchases of VideoCD and Chaoji VCD players are not as likely to be deferred as are purchases of higher priced consumer durables and production equipment, which have dramatically impacted U.S. export sales.* However, there can be no assurance that the Company will not experience reduced sales of its products into Asia because of declining consumer spending or because of its customers' increasing difficulty in obtaining letters of credit, which the Company requires prior to shipment.