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Exactech has been rated a buy since March 2007. In the first quarter of fiscal 2008, the company reported a 34% increase in revenue over the year-ago quarter. This improvement was driven by strong growth in all major product lines and higher revenue from the company's international operations. International sales grew 67% year over year, primarily due to new distributors in Europe. Net income improved 49% to $2.8 million, or 23 cents a share, compared with $1.9 million, or 16 cents a share, in the same quarter one year prior.

Looking forward to the second quarter, Exactech anticipates earnings in the range of 22 cents to 24 cents a share on expected revenue of $40 million to $43 million. However, the company is highly exposed to foreign exchange risks with its increasing share of global business, and stiff government regulation could negatively impact product approvals and therefore operating results.

Pericom Semiconductor PSEM designs, develops and markets high-performance interface integrated circuits (ICs) and frequency control products (FCPs) used in advanced electronic systems. Interface ICs transfer, route and time electrical signals among a system's microprocessor, memory and various peripherals and between interconnected systems. FCPs are electronic components used as time and frequency clocks in electronic products ranging from computers and telecommunications switching equipment to cell phones and televisions. Pericom's interface products increase system bandwidth.

We have rated Pericom a buy since February 2007. The company reported that third-quarter earnings surged 58% year over year, bolstered by strong demand for its products. Revenue for the quarter climbed 36% to $41.2 million. Net income increased to $4.1 million, or 16 cents a share, from $2.6 million, or 10 cents a share, in the third quarter of 2007. The company expanded its Digital Video solutions by launching two new switches that allow next-generation computing platforms using dual function graphics ports to be switched between either of the high speed protocols. Pericom also launched three new signal conditioning products and expanded its Timing portfolio.