It should come as no surprise that SVGI's fortunes are tied to the Micrascan system from SVGL and the new facility on the East Coast. They go from 20 to roughly 200 spepper capability at an average ASP of $6 million.
I was not confident enough to take a serious long position in SVGI but rather "gamble" with some options instead. Most of the June 25 options expired on me (25) while a break even to slight profit on the June 22.5 calls. My major dollars look to be on the July/Aug 25s and Sep 30s. I have 25 contracts for each target that is making me very antsy.
I am trying to hold out for 30 this week but will dump at 27 to protect profits on the July calls.
I thought SVGI could go to the 30s depending on the outcome of the way INTC and IBM were going to go relative to their next generation of steppers. The jury is still out here and remains to be seen whether these big orders will be deliverable.
The recent run up in price, IMO, has more to do with the speculation of a merger with AMAT in the next few weeks. Rumors have been spread even on this thread relative to an AMAT takeover. If you go back to some of my prior posts, I have mentioned this before as a possibility. I also mentioned that the timing might coincide with Semicon West on CA in mid July. We are two weeks away from this convention which would be the appropriate time to spill the beans. The rumor has some meat to it because it makes real good sense. Awhile back, I stated that AMAT might want the Micrascans but possibly not the track division. This was premised on two things. First, I beleived that AMAT might actually be working on its own internal track/cluster tool for resist application and develop. Second, I also thought that the FSII systems would be a great acquisition for AMAT. FSII has both cluster and track systems along with some of the best chemical delivery (CMP) and cleaning systems (both wet and cryogenic).
Well, the industry is very incestuous and you have seen the recent Fusion merger into Eaton Corp. So the consolidations are still occurring. Interestingly enough both SVGI and FSII are up in price. Nothing like backing both scenarios. What is real interesting is the internal track/cluster tool for coat/develop does not look like it will actually take place. We are too close to SEMICON and there have been no announcements and leaks. The probability of this happening then is getting lower by the day.
If there is no internal litho system being introduced by AMAT at SEMICON, the SVGI merger takes on a very high probability. Keep in mind that IBM, a potential big user of SVGL Micrascans, sold its interest in SVGL back to SVGI a few months back.
It would have been silly for IBM to cash out of SVGL then especially if they were going to buy a ton of their systems down the road. The price of the stock in SVGL would have grown considerably and overshadow the deal they made with SVGI. (unless they knew they were going to delay or not buy the systems, right???)
Maybe not!! Remember the terms of the deal. IBM got 500,000 shares of stock in SVGI as part of the deal along with cash and equipment. What if SVGI was getting their house in order for an acquisition by another company or for the sale of the SVGL division to someone else. Both situations would be very beneficial to IBM with the shares of stock they got in the deal a few months back.
Botton Line: Get ready to pull the trigger on this stock on a moments notice. The next 2-3 weeks are going to see this stock being volatile based on the rumors of acquisition and the impending orders (or lack thereof) along with the speculation of new consolidations in the industry. I can't tell you which way this stock is going to go because of the intricacies of all these scenarios. One thing is clear to me though, this stock is going to move and not stagnate here at 28.
A real cliff hanger here for the next few weeks.
Andrew |
