Graphics is not worth $13.50. Via is buying protection from litigation by Intel, for $144 mil. also Via also recognizes the undervalued appearance of S3.
For example, why didn't Via buy S3 when it was trading at $2 last year? or even at $6? Its because there was so much uncertainty surrounding S3's capability of existing as an ongoing entity.
But KP got the house in order (sort of), and got Diamond on the cheap (because they were so cash poor).
During the CC, KP said repeatedly that they would separate the company into 2 divisions, 70% rev from graphics (including Fire GL German division), and 30% high growth other (from DIMD).
Because the growth is so high in the 30%, he's hoping that the market will value that portion at 20-30x earnings, which is probably a positive number.
The 70% graphics is breakeven at best, and very negative at worst.
UMC assets may or may not go with graphics division. Its problematic because of the attached manufacturing rights.
So, if graphics is valued at $4 (say 1:1 revenue)
UMC at $11 ($7.5 after tax)
Network/Comm $8 (guessing $250 mil in revs this year and trade at 3x revenues)
45% of RioPort at $5 (45% of $1 billion)
you get a total valuation (complete guess) of $28
So, if you want to double certain estimates, like graphics to $8, you get $31.
This is a wild guess as to the valuation of S3 if it were broken up. Feel free to post your own.
Nothing else to do here on this thread.
BL
ps
I think the downgrade today will move the stock down, since S3 may still trade on the graphics valuation. However this move should be temporary (i hope), since late feb thru may will bring a string of announcement from S3 re: its efforts to bring out the value of its DIMD assets. |
