Another Forbes article, mentions CUBE.
He gets ZRAN's ticker wrong, and also seems to have the ratio of the CUBE /HLIT transaction flipped. According to the CBS Marketwatch article, C-Cube stockholders will exchange one of their shares for 0.5427 of Harmonic stock, but this guy says .46 shares. Maybe he just subtracted wrong: (1 - 0.54 = 0.46).
forbes.com
January 04, 2000
One Week View
Chip trends 2000
By Om Malik
NEW YORK. 12:10 PM EST-The average semiconductor stock has quadrupled since the industry hit an all-time low in October 1998, causing many investors to wonder if there is any upside left among chipmakers.
On the face of it, chip stocks are looking expensive. The average price-to-earnings multiple of chip stocks is 48 while the S&P 500 is trading at roughly 32 times earnings. In other words, semiconductor stocks are trading at a 50% premium to the S&P 500, which in itself is trading at record multiples.
Nonetheless, most analysts still think there are bargains to be found among chip stocks. The key, they say, is to look for industry niches that are gaining momentum. In 1999, communication chip stocks such as Applied Micro Circuits (nasdaq: AMCC) and PMC Sierra (nasdaq: PMCS) propelled the Philadelphia Stock Exchange's Semiconductor Stock index higher by 102%. In 2000, expect broadband, wireless and digital-home related semiconductor stocks to grab the limelight, analysts say.
[snip]
DVD and set-top boxes
The demand for digital consumer devices such as DVD players and set-top boxes is expected to almost double in 2000, according to Cahners In-Stat. That's good news for C-Cube Microsystems (nasdaq: CUBE), according to Arun Veerappan, who tracks the company for BancBoston Robertson Stephens in San Francisco. He thinks C-Cube is a good investment and can be had for a bargain.
C-Cube is selling off its cable infrastructure-related business, Divicom to Harmonics Lightwave (nasdaq: HLIT). The sale would result in C-Cube shareholders fetching 0.46 shares of Harmonics per share of C-Cube. Harmonics is trading at $91.13 a share while C-Cube is trading at $60.13 a share. Take $41.92 out, and the leftover C-Cube is trading at roughly $18 per share.
"With about $200 million in sales, C-Cube Semiconductor can easily expand its current gross margin of 50% and earnings which are at present in the 65- to 70-cents a share," Veerappan says.
BancBoston is forecasting C-Cube's chip sales in fiscal 2000 at around $240 million.
Zoran (nasdaq: ZORN) and ESS Technology (nasdaq: ESST) are two other players benefiting from the DVD boom. They also make MPEG-2 chips, which are used in DVD players.
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