IDTI - an IC Play on Growth Markets Message Board

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Technology Stocks : IDTI - an IC Play on Growth Markets

IDTI 48.99

0.0%

Mar 29 4:00 PM EDT

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To: shoe who wrote (11528)	1/17/2004 4:55:50 PM
From: Rob S.	Read Replies (2) of 11555

IDTI has great financial strength and has tightened up it's facilities and operations over the past few years so that it has good leverage on increased business. But the return on assets is too low - they either need to put the cash to use of pay some of it out in the form of a dividend imo. IDTI has done a lot right but has been a bit overly conservative in pursuit of new projects, making them less exciting and rewarding of an investment as they might be. I think the stock is looking near a top but the timing of that probably depends on momentum in the market as much or more than immediate news or trends within IDTI. There has been a lot of good news to cheer about for the semi sector: SIA and other industry forecasts have repeatedly increased over the past several months and recently. Earnings are coming in better than expected and guidance looks good, particularly the indication that corporations are spending and foreign markets are participating and in many cases leading the way. I think this trend is 'real' but that some of the near term gains are for replenishment of inventory levels and pent up demand in telecomm and the PC/server replacement cycle. The long term trend will not be as buoyant as the current trend suggests. Much of the capital spending insanity of the Internet bubble will not return . . spending is now aimed at real needs or highly likely ROI spending. That is healthy. A resurgence in telecomm spending has seen a near term spurt from depressed levels. The longer term trend is for high single to low double digit growth in telecomm equipment spending. To IDTIs benefit, a shift is taking place for the majority of spending to occur in IP capable infrastructure, stimulated by VoIP, digital cable, VOD, and spending on new and replace Internet infrastructure. So while overall telecomm spending may be lackluster, relative growth in IP related products, particular the newest, most cost effective equipment, will be much higher, my guess in the range between 12%-20% annual growth rate. I see IDTI just holding their own rather than gaining market share unless they more aggressively pursue product development. Given all this, I think the market for semis has near term reason to feel good about itself and for investors to imagine that the present growth rate will never end . . leading to present and perhaps higher near term valuations. No doubt these valuations are unlikely to hold once growth falls back into line with the long term trends.

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