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Technology Stocks : Alliance Semiconductor
ALSC 0.8100.0%Jul 10 5:00 PM EST
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To: Woody_Nickels who wrote (5603)7/28/1999 6:29:00 PM
From: Charles R  Read Replies (1) of 9582
 
Ken,

<AJBerger, What are ALSCs options to increase shareholder value?
1) spin 7 shares of UMC for each ALSC share directly to us. Use BRCM
for further investments.
2) Keep the UMC shares for ALSC use and split ALSC 2:1. An $800M+
company should be able to support 80M+ shares. Need to get the
share price of ALSC up first by showing some earnings. Use BRCM
for further investments.
Any other ideas?>

There is much simpler thing that can be done that will boost shareholder value - ALSC management should just sell the BRCM and buy ALSC.

Let's say ALSC buys back about 8M ALSC shares from BRCM proceeds. Here is what would happen.

Current book value ~ $860M
Current shares outstanding - $43M

Current Book Value per share - ~$20

Book value after stock repurchase from BRCM holdings @avg $10: $780M
Shares outstanding - $35M

New book value per share - ~$22

It is a good idea to improve the book value in the current situation because ultimately the stock will trade up to or above the book value. If the management fails to do that ALSC will get bought out at some % of the book value.

Stock buy back is seen as a strong vote of confidence (especially when done on a large scale), the stock will moveup on the news of stock buy back.

I don't know what the management is waiting for. The sooner they do it, the better it is. They should have announced it last week and bough back some shares when the stock was trading in the 7+ to 8+ dollar range.

Chuck
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