It has been a rough couple of days, but I remain confident that we are headed WAY up.... In the meantime, here is some VSH to SILI extrapolation data to consider.
Last Q, VSH had $36.5M net on $468M in revenue, $0.42 EPS, 86.904M shares. This is a net margin of 7.8%
Last Q, SILI had $24.4M net on 110.1M in revenue, $0.817 EPS, 29.879M shares. This is a net margin of 22.2%.
VSH would record, net, $19.6M of SILI net (80.4%) as part of its net. 19.6/36.5 = 53.7%
If we back out SILI from VSH for Q4 1999, VSH had $358M in revenue and $16.9M net earnings. This is a net margin of 4.7%.
We know that VSH will improve EPS to "at least" $0.68 for Q 1. Assuming the same number of shares as Q4, VSH will have "at least" $59.09M in net earnings for Q1, an increase of $22.6M from Q41999.
Now some backwards extrapolation to SILI.
If SILI's 80.4% continues to account for 53.7% of VSH net earnings, SILI would end up posting $39.66M in net revenue for Q1 2000: this is $1.33 EPS for SILI.
If SILI's 80.4% accounts for only 45% of VSH net earnings in Q1 2000, SILI would end up posting $33.24M in net revenue for Q1 2000: this is $1.11 EPS for SILI.
If SILI's 80.4% accounts for only 40% of VSH net earnings in Q1 2000, SILI would end up posting $29.55M in net revenue for Q1 2000: this is $0.99 EPS for SILI.
In order for VSH to report "at least" $0.68, $59.09M in net revenue, with SILI only accounting for 45% of it, VSH would need to post $32.5M of net earnings on whatever revenue existed. Given that VSH entered the Q with an overall book-to-bill of 1.16, which would include SILI's book-to-bill, which I think I recall was 1.14, I think it is safe to assume that VSH has expanded revenue by at least 16% sequentially in Q1.
A 16% revenue gain for VSH on its "own" share of revenue, $358M, would produce $415.3M in revenue for VSH, exclusive of SILI. In order to get to the necessary 32.5M in net earnings, VSH's net margin on non-SILI revenue would have to increase from 4.7% to 9.1%, which is nearly 94% greater than in Q4.
Here are some quotes from the VSH Q4 earnings announcement:
<<On a revenue increase of 14 percent, we were able to more than double our net earnings (before special charges). >> [This is year over year not Q to Q]
<<Our book-to-bill ratio for the quarter was 1.16 to 1 and our backlog increased to $505,000,000 at December 31, 1999, an increase of $196,000,000 from January 1, 1999. Long-term orders are not included in this backlog. We are increasing capacity in all of our major product lines to meet the continuing demand for our products. Our Siliconix operations have again, for the fourth straight quarter, reported record breaking sales and net earnings. The demand for Siliconix's products continues to be strong, especially in the wireless communication markets. By now, all of our product lines are experiencing strong demand. It started with semiconductors, followed by capacitors and presently resistors have started to show very strong demand. Our improvement in profitability can be attributed to production efficiencies, cost reduction programs including movement of labor to low cost countries, price stabilization, and in some products, price increases. Most of the price increases are still in the backlog and will now begin to be reflected in the first quarter of year 2000 and thereafter.'>>
A doubling of margins in one Q is certainly possible, but I think unlikely. Even if VSH doubled its margins on non-SILI revenue, SILI would still end up with in excess of $1.10 EPS for Q1 -- not too shabby.
Of course, if SILI continues to be the STAR out-performer, $1.30+ is within reach. Do not misunderstand me: I am not predicting $1.30. For now, I am sticking with my $1.03 for Q1 and I will probably continue to stick with it unless we get CLEAR guidance from SILI that more is expected.
Troy
PS - While some of the comparisons I have made here appear simple and straight forward, I am sure that the "details" of the financial statements make them much more complicated than I have presented them -- I view these calculations as estimates, with a potentially healthy margin of error, and not absolutes. |
