i'm all for owning the new new gorilla in this space, but isn't this a wee bit pricey?
It is pricey, but your calculations don't take into account SDL's preannouncement and also the huge expansions underway at the acquired PIRI and Veritech facilities which should enable very strong growth.
SDL preannounced FY3Q00 revenues of around $105 million.
As a private company, PIRI had been managed for profitability. Now it will be managed for growth. In CY1Q00, PIRI had $20-25 million in revenue. It ran one line on two shifts for 5 days a week. SDL is ramping that to 2 lines, 3 shifts, 7 days a week. Veritech's facilities are being expanded from 18,000 sq ft to 70,000 sq ft (that is the initial space which will be used in the new 133,000 sq ft facility, so there's more room for expansion). Veritech had about $22 million in revenue during 1999.
Forgetting all the expansion in the acquired companies:
@$41B,
SDLI = 98x annualized quarterly revs (based on a runrate of $420 million).
with JDSU now at $96 per share,
SDLI = 66x annualized quarterly revs.
Certainly, this is expensive, but SDL also preannounced 58% sequential proforma EPS growth (not just earnings growth through acquisitions, but EPS growth due to the extremely accretive acquisitions).
JDS is growing EPS sequentially slower, so I think the premium for SDL is justified given the valuation of JDS. And, of course, JDS had to outbid Corning.
Ali |
