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Politics : Formerly About Advanced Micro Devices
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To: Paul Engel who wrote (55954)4/21/1999 5:31:00 PM
From: A. A. LaFountain III  Read Replies (2) of 1571547
 
Re: Vantis

From the 1998 annual report, Vantis operating margin for the past three years has averaged 11% (it was up to 15% in 1997, but dropped back to 10.5% last year).

If we look at the publicly-traded comps, Lattice has the closest product mix (although I would guess that it is well ahead in the SPLD to CPLD transition, as the latter generated about 70% of total corporate revenues in the March quarter). Its operating margin was 27.3% and it is selling for 7 times trailing twelve months' (TTM) sales. However, LSCC has a pile of cash (about $13.20 per share), at least $10 of which should be subtracted from its $58 price for valuation, so maybe six times sales makes sense (for comparison, ALTR closed today at 11.8x sales and XLNX at 12.5x - both with considerable cash per share).

On a size basis, Actel is slightly smaller (TTM sales of $154MM) and had an operating margin of 13.8%, so despite the difference in products (ACTL is strictly FPGA and at this point is still antifuse-based, although SRAM and flash parts are imminent), it represents an appropriate comp. ACTL closed today at 2.8x sales, so perhaps 2.5x makes sufficient allowance for its cash.

2x - 2.5x Vantis 1998 sales of $205MM would lead to $410MM to $512.5MM in value (that's nothing more than a statement of mathematics by myself as an individual and should not be viewed as an endorsement by me or my firm of any particular value or valuation methodology). - Tad LaFountain
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