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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Pirah Naman who wrote (23880)4/30/2000 6:23:00 PM
From: Grantcw  Read Replies (1) of 54805
 
Pirah,

I realize that semiconductor companies, CREE included, must make sizable investments in foundries to grow. These capital expenditures negatively impact cash flow.

My question to you is, how do you factor in the fact that CREE floated a sizable secondary offering earlier this year that seems like it would cover a good amount of future capital expenditures.

It seems that your valuation model would not take these financing activites into account, but I'm sure that you would agree that this secondary offering has some bearing on the valuation of CREE. I'm just wondering how you factor in financing activities into your equation. Would the amount of dilution of the offering affect your calculations at all?

Thanks,

cw
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