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Technology Stocks : MEMC INT'L. (WFR -NYSE) The Sleeping Giant?
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To: Dave Grady who wrote (372)6/15/1996 10:19:00 PM
From: Jonathan Edwards   of 4697
 
Some observations on AVCC:

According to their 10K filed in April, they've invested in auto service centers in
addition to Recticon. This is not a pure play on wafer fabrication.

The 10K contains the following comments related to Recticon's purchase of new
equipment (financed by customers):

"These new Units will not only give Recticon added capacity, but will also enable it to eventually enter into the six-inch wafer market and, subject to purchasing additional equipment, give it the capacity to enter into the eight-inch market. "

In other words, Recticon is not presently in the 150mm or 200mm markets. Maybe this is not a big deal since wafer supplies are tight. Or maybe it indicates Recticon is a "trailing-edge" company.

Finally, AVCC increased its valuation of Recticon from $3.5 million to $12.5 million "primarily as a result of Recticon's anticipated increased profitability, a substantial increase in its backlog and the cash infusion during 1995 of $4.7 Million as a result of certain supply and equipments contracts it has entered into with certain of its major customers." As a result, Recticon accounts for about 75% of AVCC's assets. This may be a legitimate move, but it may also be accounting chicanery. (I'd love to be able to treble my net worth by fiat...)
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