PSE Circular for Brokers No. 1267-98

June 8, 1998 PSE CIRCULAR FOR BROKERS NO. 1267-98 June 5, 1998 SECURITIES & EXCHANGE COMMISSION SEC BUILDING, EDSA Mandaluyong City Attention: Money Market & OPNS Dept . PHILIPPINE STOCK EXCHANGE Tektite Tower, Ortigas Center Pasig City Attention: Monitoring Department Gentlemen : At the request of certain stockholder groups, the holding of the Annual Stockholders' Meeting was deferred until a consensus is reached on the meeting date to enable all the stockholder groups to attend the said meeting. We will inform you of the actual date of the meeting as soon as the stockholders have agreed on the exact date of the meeting. Thank you. Very truly yours, (SGD.) ROLANDO P. NAVARRO Vice-President Legal Services 08 June 1998 LISTING AND DISCLOSURE GROUP PHILIPPINE STOCK EXCHANGE PSE Centre, Exchange Road Ortigas Center, Pasig City Attention: Ms . Grace De Guia Supervisor Gentlemen, We are writing to clarify a news report on our company, MUSIC Corporation, which appeared via the Bloomberg system last 03 June 1998. A copy is attached for your reference. We believe the report to be erroneous and grossly misinterprets the true position of our company to the investing public. We feel therefore that we should clarify this report. In the report, a Mr. Noel Reyes of Anscor Hagedorn Securities, Inc. was quoted as saying that MUSIC had failed on its promise to deliver products to the market as the reason for our stock price's decline. We would like to point out the following in this regard: The company introduced 9 new products into the market in the latter part of 1997. New product introductions are again scheduled in 1998. But, the company has not, nor do any of our clients or peers, publicly release a new product timetable because this gives rise to potential lawsuits. We attach copies of two articles published in the Electronic Engineering TIMES, an engineering publication in the United States, which report on the business direction of MUSIC and our more recent product introductions. In this regard, we would like to further request your good office to call the attention of your member firms who, unfortunately, make such misinformed reports; especially firms who make statements on companies when they do not actively cover the stock. In this case, Mr. Reyes has never approached our office, past or present, to inquire about anything regarding our company. Upon clarification sought from Mr. Reyes, he informed us that his statement was based on their impression . An impression should be premised on facts at the very least, and these facts could not have been known to him because neither he nor his staff ever covered MUSIC, considering the very technical business or industry it is in. We would like to assure our shareholders that MUSIC operations and outlook for 1998 and the coming years have never been more positive. In fact, the company is eager to have finally reached this stage of product development and cost effective operations. As it is evident from MUSIC's financial results and operations that the drop in the share price of MUSIC these past few weeks is in no way a reflection of its fundamentals more so its business potential, we would like to encourage all analysts and brokers to be instrumental in releasing factual and accurate information not only about MUSIC but all other Philippine companies, especially in a time when a regional sentiment casts a cloud on our very own stock market. We look forward to your assistance in ventilating our explanation to the public, and preventing similar irresponsible reportage in the future. Very truly yours, (SGD.) MITOS TANTUICO-ZSHORNACK Vice President Corporate Affairs AFA STOCKWATCH: Music 2 (price turns lower) June 3, 1998 5:13 At 11:00 am Music was down 0.10 pesos at 7.70 on 583,000 charge. The composite index was down 12.23 points at 1,933.85 on 346.6 mln shares worth 406.5 mln pesos. Noel Reyes of Anscor Hagedorn Securities Inc said Music failed to sustain its rise amid weakening sentiment on the issue. Reyes said confidence on Music went down after its promise to come out with a new product failed to materialise. "It stumbled on its promise. In a very fast paced industry, a product slatedfor release now may suddenly become obsolete." he said. He said most investors were short-covering, which may partly explain the stock's earlier rise. cda CONTENTS, FEBRUARY 16, 1998 BUSINESS 38 Music Semi's new song : packets Content-addressable memories are becoming a packet-processing specialty as Music Semiconductor redesigns the parts for IP and ATM handling. CAMs for Internet Protocol and ATM packets redesigned Music Semi's new song : packet processing By Loring Wirbel HACKETTSTOWN, N.J. After nearly 10 years of bouncing between content-addressable memories and graphic palette products. Music Semiconductor Inc. is recasting the CAM business as a packet-processing specially market, redesigning its CAM's for optimal performance in handling Internet Protocol and Asynchronous Transfer Mode packets. As a short-term aid to designers, Music is publishing detailed application notes on using its Wide Port LANCAM memory product, in conjunction with the Internet Engineering Task Force's Classless Inter-Domain Routing protocol (CIDR), to implement the equivalent of hybrid "Layer 2/Layer 4" switches. This spring, Music will offer a special 80-bit synchronous CAM form route-table applications, followed by two CAM products designed for IP Version 4 processing. The moves make explicit an implied truth about CAM applications: They remain almost solely the domain of inter networking, used for building route tables, address lookup blocks and similar list-processing memory blocks for switching and routing. Some developers, notably UTMC Microelectronic Systems Inc. (Colorado Springs, Colo.), have responded to the popularity of CAMs by offering controllers that can treat traditional SRAM blocks as CAM tables. Other vendors, including Kawasaki LSI and Motorola Inc., have made attempts to enter the CAM business, while failing to, overtake Music's dominance. Even though that dominance has allowed Music to keep average selling price for CAMs high, the company has been cognizant of the need to update its market strategy. David Feldmeier , director of product development at Music, said the company founders made two critical decisions 18 months ago. First, addressing user complaints that ASPs costs far too much, Music undertook a cost-reduction program, under which a 1-kbit CAM that sold for roughly $50 in 1992 was $5 in volume by early 1998. Second, the company realized that more sophisticated feature sets would be required for feature IP and ATM switching tasks. This necessitated a move from full-customs macros to Verilog-based design. The chip maker will focus on protocol acceleration, said company executive . Music brought in Feldmeier, who had several years' experiencing designing packet encryptors for the intelligence community, to study packet-forwarding problems and examine how CAMs might address designers' needs. The first step was to define how to perform effective address translation within the existing boundaries of 32-bit IPv4 addresses. Feldmeier said that work had begun within Music several months ago on a CAM architecture for IPv6, with its 128-bit address field, but developers assumed that OEMs might be many years away from moving to IPv6. In the meantime, a method of expanding usable address space was required, and CIDR, by removing the distinction of IP "class" address groups, appeared to be the answer. Music has applied for patents on methods of encoding ternary values in order to define special CAM masks. This allows far more efficient implementation of large routing tables. Up to 4.5 million addresses per second can be computed with current-generation CAMs. Although the methods are proprietary. Music has printed details of the design method as an application note, and has posted details on its Web site. www.music.com. Using CIDR to expand table sizes, however, is only the first step in the new Music effort. A device called the MUAA, a synchronous CAM optimized for Layer 2 bridging duties, will sample soon. This will be followed by special CAMs for IP processing. Two generations of these devices will offer throughput speeds of 22 million and 44 million packets/second. Music plans to publish additional user guides to implementing dynamic TCP/UDP port assignment, creating a CAM table capable of supporting Layer 4 switching. A variety of CAM depths will be sampled, including 64-bit-wide CAMs with depths of 8, 16 and 32 kbytes. Feldmeier said many more logic/memory products optimized for inter networking will be sampled by Music within the next year. All products to date have been aimed at list or pattern matching algorithms, he said, while other operations appropriate to list processing have yet to be exploited. "The central focus of the company's design efforts will be on protocol acceleration from here on out," Feldmeier said. DESIGN Monday March 30, 1998 Ethernet Chips Music Semi filter eyes LANs By Loring Wirbel HACKETTSTOWN, N.J. Music Semiconductors, Inc. has introduced the first of several promised filtering devices for complex LAN switching and bridging applications. The MU9C8358 is a quad 10/100-Mbit filter interface for Ethernet, performing source-address and destination-address filtering for Ethernet packets. The device interfaces directly to Music's LANCAM, and can be used to process complex packet headers. The 8358 operates independently of the microcontroller or MCU/switch central device, performing timing and sequencing on LANCAM address-compares. It uses an address/port database to do destination-address filtering. The 208-pin device can support a station list of 16,384 addresses. Four physical 10/100 ports are integrated on the filter, and built-in arbitration logic allows as many as eight 100-Mbit ports to be supported. Designers can implement additional optional features, such as automatic learning of new source addresses, and automatic time stamp and aging. The device performs timing and sequencing on LANCAM address-compares . The filter "taps" the Media Independent Interface bus as it is sending data from a physical-layer to MAC device. The 8358 sends destination and source addresses to the LANCAM for processing over the LANCAM bus, and gets address matches from the LANCAM. The filter can perform management task, but the built-in arbitration logic gives destination-address processing highest priority, followed by source-address processing, with management done only in the background. The 8358 is sampling now, at less than $15 a port. In lots of 1,000, the price is likely to be approximately $35 per unit. Call (888) CAM-MUSIC www.music.com Reader Service No. 614