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Technology Stocks : Semi Equipment Analysis

SOXX 296.20

-0.6%

Dec 16 4:00 PM EST

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To: Cary Salsberg who wrote (1651)	1/15/2002 11:12:33 AM
From: Kirk ©	Read Replies (1) of 95587

MXIM has achieved after tax profits of 35-40% of sales. A P/S of 12 is a PE of 30 when profits are 40% of sales. Yes, that is impressive. Maxim has been a money machine! Can they keep finding new markets for chips that they can get that sort of profit from or will their growth rate and/or profitability slow in the future? I heard Gifford's goal is to be 5.7B in FY'06 which is about 30% compounded from preslowdown levels and much higher than the current $1B level. The big question is will they be above 35% of sales at $5.7B? I know their goal is to be. With a current market cap of $18B. Lets calculate profit on $5.7B in sales at 33% (I think something will have to give so I am lowering profit margin a bit) This gives $1.88B in profits and use 4 yrs for the period Assign it a PE of 20 and you get $38B: ROR = 21% Assign it a PE of 40 and you get $75B: ROR = 43% So if they are successful then they will provide a nice rate of return even from current market cap. I'd still like to increase the odds some and get it at your lower prices...

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