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Technology Stocks : White light from LED
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To: Will Lyons who wrote (220)3/8/2000 11:58:00 AM
From: kinkblot  Read Replies (2) of 565
 
SLI - Why so cheap?

As Chicago Miniature Lamp (CHML), the company grew rapidly for several years following a June 1995 IPO, but stumbled in the second half of last year after their expansion into Europe with the acquisition of Sylvania Lighting International. The shortfall versus expectations was due to mainly to "an unexpected price war" among their big three competitors in Europe and negative currency translation. They're in Wall Street's doghouse as a result of that. That also tends to focus attention on the old economy aspects of their business. This is unrelated to the LED business, which falls under miniature lamps and is based in North America.

Results started to rebound in the fourth quarter, and in the recent conference call the company indicated that the pricing environment in Europe has now stabilized. In fact, GE has announced a 7% price hike in the U.K. effective April 1. I figure if they can beat estimates again this quarter that will get them out of the doghouse. I'm not in it strictly for the LEDs, since it's far from a pure play, but if that kicks in and boosts the projected EPS growth rate, you could get some multiple expansion. The multiple can also expand just in recovering to its historical range from the current depressed level.

The CEO is sometimes a bit antagonistic - he's a Street Fighting Man.

WT
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