Decmber 8, 1997
hey latest from Zachs
service!!!!!! Brokerage Firm Date of Last UpdateRecommendation
SALOMON SMITH BARNEY 12/04/97 OUTPRFRM-LOW RISK H J
MEYERS & CO INC 10/31/97 STRONG BUY SALOMON BROTHERS INC
as of august 7, Salomon now covering and backing
Salomon increased 18 month target price to "$30 is reasonable" based on the following
1 - O/S booted by end of august
2 - 2 processor in unix before end of sept.
3 - deliever 2 (hopefully 4) processor MTA systemto SD beofre end of OCT.
4 - certification of DYNA -3d software before end of nov
5 - book 2nd order to be delieverd in 1998 before end of year to either govt or 1-2
next generation supercomputers///were talking petaflop performance.........it needs new architiecture adn so far tera is leading the way
MTA to the desktop!!!!!!!!
a future possibility?????
10years we'll see
lets get thru another crazy marekt week first
Thanks for all the info. guys!! I am a very small investor in tera, but am exited about their LT-potential. One question? From what I understand this market is only a bit over 1bill., what other opportunities do they have down the road?
I'm nervous also. But I bet even the super bowl players get nervous just before kick-off. While we all like super profits, I have grown to regard tera as sorta a friend. To me there MTA system is most exciting.
I am a bit concerned about the delivery of first computer to S.D. or perhaps just the untimly manner it is getting there. If they have to delay, delay, and delay somemore, what does this say for the lead time on future orders? Will it happen henceforth like clock work(we know what we're doing, now watch us do it). Considereing the effort put forth for this first system, I would immagine the rest should be gravy.
I know they are planning for delivery of at least four units in98, maybe six. However, what obsticles will they encounter in production? Is it really possible to meet these expectations? As much as I'd love to see 30, and even 60. I don't see it
jumping up to these levels with out the confidence of wall street. This confidence will be seen after they deliver one or two units in a very timly manner. The government as well as ucsd can afford to have patients, but in the real world, not so. Even if you have something every body wants, they'll walk away if too much chain jerking goes on(customers as well asinvestors).
>> I realize that R&D is an ongoing investment. however, will they absolutely need 12 mil. for this next year? What happens if they stay conservitive with R&D next year? will cray,ibm, or someone else blow them out of the water? not likely IMO.
I think that the stock maintained quite well this past week of the tech woes. Looks like she doesn't want to drop below 15. Notice however that we found stability at 10,11,12,13, and now 15. We forgot about 14. Is that because we didn't need it
or just bounced past for a bit. If they dont announce delivery and running this week, our concerns will turn real, and the price will be back to 13-14. I then see the stock rising only to 17-18.50. in the wake of delivery. Price will rise a bit more on confirmation of order(s). But the real action won't happen until first delivery of future orders. If future deliveries happen smoothly, timly, then the sky is the limit.I don't know why "colosus328" says wed., but I sincerely hope his crystal
ball is accurate. It could and should be any day now.Can't be weeks anymore as there aren't many left in '97. Should we start chilling the chanpagne?
I just realized that I have been typing for at least 20 min. and I'm not sure if this message is worthy. bye
i asked tera about hj pushing the stock and that i was uncomoftable with it........without saying so i sensed his displeasure also......all he could say was hj financed them a long time ago when no one else would .....now salomon/smith barney is covering them (jones is top ananlyst and retained his whole staff in salomon - smith barney transition)..........more analysts are expected to initiate coverage
yes yoru analysis is simplified:
a 16 processor is anticiapated to sell for 12 mil.........4 systems = about 48-52 mil.........a gross profit of 24 mil
meeting important milestones (delievery, a few orders etc) can significantly increase earnings potential--------they have a huge margin.......this is a long term play.....im certainly not expecting 30 in 3 months.........30 by end of year 1998 is very reasonable with 60 the following year...not to shabby
85 employees now.......increasing very quickly...new building
they have already been running programs in simulation.......the beauty of there systems is EXISTING codes can be used with out much tinkering/rewriting.........thats what makes this so attractive!!!!! current machines CANT scale without major rewriting......
they ahve been talking with people for many years and have a big pool of interested clients...the big IF is will they deliver a system.......thats what we have all been waiting for...if htey dont well, i hate to think about it--------we'll go back to 10 in a few hours----RISK--and stuck holding a compnay that has lost all credibility.
we shall soon find out----am i nervous, hell yeah
tera is nasdaq small cap
I was contacted about this stock (this week)by an HJ Meyers rep and my recollection is that he stated this stock already traded on the NASDAQ! Again I think that this stock is being driven by the success of the HJ Meyers reps inpushing the stock onto
those susceptible to their high pressure techniques. As I say, I was called and thought about this stock. I did not buy. Think about this. The Yahoo research shows to brokers recommending this stock and a consensus earning next year of $0.60. It is costing about $12Mil per year for research and development. Based on the $4mil that UCSan Diego has for their system to purchase and debug let's say a system costs $4mil. To earn $0.60 across about 10mil shares is $6mil. So that means that they
must 'earn' the R&D plus the 'earnings' on sales next year, or they must clear $18mil. Lets say that the actual construction of the systems is only 25% of the cost (R&D being the rest, but already considered). If they deliver $24mil in systems next year they will earn $6mil on this simple analysis. This still leaves them with a PE of 25 even at the current $15 stock price. I heard from HJ Meyers that Salomon had a $30 price projection, this is a PE of 50! Who can think of $60 per share.
All this with only 85 employees! The software in these systems is very complex and will probably require significant tuning for each customer. Probably my costs are considerably too low. Do you really think they can complete delivery of 6 systems next year? These things are not simple cookie cutter systems. This company is probably a great technical challenge for the employees and maybe in 3-5 years they will have it together. I believe that it is only hopes holding up the stock of this company
right now. The above is definitely simplified, but I'm not in, especially if this stock isn't even on the NASDAQ!!!
ok...well some good news...spoke with CFO ken johnson at tera this afternoon...
they have applied for the nasdaq........and anticipate it as soon as feds get to it......this will enable a few things....easier requriements for secondary, adn instituitional buyings, along with greater exposure...
additionally tehy expect to become marginable by end of feb. (paperwork submitted)
still anticipate dec delievery..
had another institutional broker talking with co yesterday
employees have performance bonuses tied to getting product out so they are doing the best they can
said they are not effected by asia (had not planned to sell to asia for many years)
automakers need there product.......regardless of what happens to economy...teras machine will have them developing products quicker
they are buildiing new machines.....although no oders confirmed....they are proceeding as if they expect orders
accepetance of 2 processor is a simple benchmark test
4 processors they have to show it can run 2 of 3 programs...auto crash test
8 processors they have to show it can run stable for a certain lenght of time
they anticipate moving in new facitily in sept-nov 98
its adobe software old facitliy
have 2 sales people in Japan right now
they ahve a big pool of potential customers tehy have been working with for some years.....tehy need to build credibility by shipping....
anyone else dig up anything??
i would expect from toadys close that 17 would become new low support level after shipping...conservative
i know right now so close to shipping i am supporting at 15......may even raise that.......
but oh boy----what if there tech is not up to expectations------look out--------------guess thats why i havent bought any more yet---------yet being key word