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Technology Stocks : S3 (A LONGER TERM PERSPECTIVE)
SIII 0.00010000.0%May 12 5:00 PM EST
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To: Charles R who wrote (13311)7/10/1999 6:30:00 AM
From: Jan A. Van Hummel  Read Replies (2) of 14577
 
In the absence of a predictable stream of future earnings (although we
are getting closer) I look basically at the underlying assets base.

The current value of their fab stake and cash is abt $14/share and rising
(given the current strength of the fab market). So, S3 is trading a
15 % discount on these assets alone.

Theoretically, you could own S3 at just above $12/share, sell off the
fab, and be left with a cash-rich company that is on the rebound and
a market leader in its industry, AND you did not pay a dime for it.

The DIMD has the potential to add appreciably to the overall and not
just because of the Rio.

I would also venture that the fab stake, if put on the market today,
might actually go at a premium to market value.

So, at this point I consider S3 still rather undervalued and it has
been for some time. The lack of earnings caused this depressed state
of affairs. However, once they start showing earnings, and predictable
ones at that, we should see that stronger reflected in the stock price.

Based on what we know today and barring any negative surprises I would
think we should be in the low to mid 20s. Solid earnings in the 3rd
quarter could bring such valuation (assuming the 2nd quarter will be
flat at best). A positive surprise is possible in the valuation of
the fab stake and Rio is the wild card.

JMHO
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