Debt Is Not a Concern. Chip demand, capacity, and leadership are the key.
That's why, IMHO, the stock did not tank when the creditors of Anam denied the offer for a $800 purchase for the K1-K3 factories. I am very impressed with the increase from 58% to 63% for Amkor's advanced high-margin product line.
I'll not be surprised if AMKR will issue, say, 100 millions new shares to buy the entire Anam and pay their debt. That is what everybody, AOL/TMX, TSM, Cisco, Lucent, Intel, .... is doing these days.
At $40 per share, the $4 billion can buy:
K1-K3 -- $1 billion
Remainder of Anam including the foundry and debt -- $2 billion
AMKR's other debt -- $ 1 billion
Dilution, yes, but hardly, because with 225 million shares outstanding AMKR's market cap is still less than $10 billion with total revenue about $3-4 billion (?), and DEBT FREE! That's what people and the Wall Street have wanted.
The stock may come down for a while, but people will realize AMKR is worth more the 40 soon after if we compare it to others in the same section of industry (semiconductor chip contracting):
TSM -- 1500 million share outstanding with a Mcap $100 billion and revenue less than $1.6 billion and PE 137.
CHRT -- 127 million share outstanding with Mcap $11 billion, revenue $0.69 billion and no PE
ASTSF -- 1/3 of AMKR's size and $2 billion revenue
STTS -- the new chip packaging contractor in Singapore with 1/10 of AMKR's revenue but similar Mcap and PE 335
This stock is 95% owned by institutional investors beside insiders. If a few analysts' responses are possitive, the deal will be done. John Neff does not sit on the board idling and Goldman Sachs doesn't own 14 million shares of AMKR to lose money.
With possible new coverage by GS, MSDW, and/or DLJ the fun part is just starting. |
