Hi Kirk,
RE: "I'd love to see Cary or someone compare it on a valuation basis to AMAT and NVLS."
I started working with HP in 1973, when I worked in the timesharing business. In 1976, my company became an OEM for the HP 3000 and 250, and later we were value added resellers, VAR. I long thought that there was a window when HP ws the best company ever.
A was spun off from HWP, so that presents some problems. First, there isn't a long track record as an independent company. Second, in the spin off, bits and pieces were kept and others released. So, A consists of pieces that failed some sort of screening process by the parent company. Given that the spun off pieces have strong technology as the common characteristic, one can question the validity of the screening.
HP was a technology company and it gained from its participation in almost every technology area. HP promoted "cross-pollination" and risk-taking, and benefited from the synergies afforded by its model. A has the tradition and some of the pieces, but it is uncertain if it has enough to duplicate the synergies.
If I remember correctly, A has 4 divisions: chip test, instrumentation, biotech, and IC development. The market and investors don't like "conglomerates" and prefer to invest in pure plays.
I think it is premature to compare A to AMAT and NVLS on a "valuation basis". The numbers, except for cash and debt, favor A, but the expected performance going forward must consider track records and greatly favor AMAT and NVLS.
A is on my prospect list. Key varibles I watch are debt (hopefully 27% goes to 0%, after tax profit margin (close to 20% in good times), and sales growth rates (20% or higher when the economy recovers). |
