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Technology Stocks : The New QUALCOMM - Coming Into Buy Range
QCOM 180.90+2.1%Oct 31 9:30 AM EST
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To: Lance Bredvold who wrote (9075)7/31/2023 7:37:08 AM
From: Elroy1 Recommendation

Recommended By
Lance Bredvold

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While I have followed SIMO for a long time, my expertise in M&A where the buyer backs out is limited, so I don't think my knowledge of the current situation is very special.

MXL lost their committed financing when they tried to cancel the deal, so I doubt any deal can go through now.

The question for me is what is SIMO entitled to if they win in arbitration? It's somewhere between $160m and the damages caused by MXL cancelling the merger. The market seems to be acting like MXL will pay zero.

That's the part I don't understand. I would be worried than MXL will have a $1.8 billion judgment against them, and they won't be able to pay it, and SIMO will in the end own MXL as a result of the arbitration verdict. But that's not reflected in MXL's share price, so I'm obviously not understanding something.

SIMO on it's own is probably worth $50 to $55. Although recent results are weak, the semi industry is clearly on it's way back up, so SIMO will get some credit. Many semi stocks are near all time highs in anticipation of the coming industry bounce. SIMO generally doesn't get much credit, but now that it's established that SIMO can be acquired by a willing buyer, and it's not out of the question that SIMO's revenues get back to $250m per Q in about a year or two, I think the shares will get some valuation benefit which never existed previously.

SIMO seems a bit overvalued now at $60 if there is no deal. I'd say $50 is more of a fair price.
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