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Technology Stocks : Semtech (Nasdaq:SMTC)
SMTC 67.55+4.9%Nov 5 3:59 PM EST
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To: Stu Bishop who wrote (1104)6/25/2000 2:29:00 PM
From: Leeza Rodriguez  Read Replies (3) of 1225
 
Stu, Jeff, SMTC longs:

Been away for ~2 weeks and thrilled to see the two recent developments.

#1) addition to S&P Mid Cap Index = g r e a t!
This opens the doors for a LOT of money flow into SMTC simply because many mid cap mutual funds model themselves after the index. It also gives the company additionally levels of credibility and clout.

#2) Burr Brown acquisition for $7.6Billion= w o w !
BurrBrown has trailing 12M of revenues of $320MM, so this means they are getting taken out at a trailing PSR= 24.
Twenty four! Consider that SMTC currently trades at a trailing PSR= 12 and has HIGHER margins than Burr Brown. Yep, you heard that right-- last quarter SMTC operating margins were 28%, while Burr Brown margins are 26%.

So----since they are in the same space, with even better margins, it is absolutely NOT outrageous to think about the valuation at this multiple.

Here we come $148 ? Whoa.

leeza rodriguez
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