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Technology Stocks : Photronics [PLAB]

PLAB 33.43

0.0%

3:17 PM EST

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To: JDN who wrote (370)	9/16/1999 11:40:00 AM
From: Carl R.	of 424

It is true that MASK did not do leading edge research, i.e. .18µ and under; rather they relied on trailing edge products for growth. Basically they concentrated on the fat part of the product line where the volume parts existed. Adding them to PLAB will not require any R&D over and above the R&D that PLAB was already doing. In fact the combined company may do less R&D than they did as two separate companies as any R&D that MASK was doing will be redundant. Thus there should be some efficiencies from combining them. As for profit margins, both companies have typically had identical profit margins, and for what it's worth, DPMI is about the same as well. The difference is that MASK was selling as a much, much lower price than it's true worth. Whether you value it on a PE ratio or a PSR ratio you come to the same conclusion. Even at the price PLAB paid, sales per share and profits per share will rise. The market seems to agree that this is a pretty good deal for PLAB. Normally the acquiring company in a stock deal sees its price fall when they announce the deal, but PLAB is flat in a down market. Carl

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