Tom,
I would suggest you order a copy of the VSH annual report, which very simply describes what the co. does and a description of the passive market in general. Look in Barron's or the Wall Street Journal and you can call an 800 # to get it. Tantalum capacitors are just the best passive components out there, and are in the greatest demand. That's all I really know about them. Kemet specializes in tantalum capacitors, and so when VSH wanted to buy them, they refused, realizing that they could grow the business themselves. If I ran Kemet, I would have done the same thing. Kemet realizes that they have or had an edge in an area with great growth potential and thought they were worth a hell of a lot more than VSH offered. Zandman, the CEO, thought Kemet wanted too much, and he commeted that the whole deal was essentially botched, because the market sensed that VSH would make a bid for Kemet, a bid that was not much more than the trading price, which Zandman (rightfully) believed had already factored in a buyout (Kemet has really not made a strong move since the proposed acquisition, because it was overvalued when they rejected the proposal).......As for the contribution of the China deal - I don't know when it will contribute to earnings. My opinion in general is that the Asian markets are tough to crack. Nevertheless, The idea behind the venture is for VSH to make it easier for the the Chinese to enter European market (where VSH has a strong presence as the largest manufacturer there) and VSH to enter Asian markets, where the co. has a small presence.....A decent entry price - I really don't like to make predictions (I am self-interested here since I hold shares and intend to for a long time) but I thought that $24 made a nice recent bottom (as I seemed to imply in the previous note), considering that the stock could reach $32 as it did 2x in the past year. I would check the competitors P/E ratios, KMET and AVX, to determine how the market is valuing the businesses (perhaps they are better deals, I don't know). All of the cos. do essentially the same thing, but VSH is the largest, and their annual report was simple enough for a bonehead like myself to understand, and I prefer to invest in such cos. that I can actively follow without being confused and mislead by techno jargon of reports such as Kemet's, which I found to be extremely confusing and difficult to comprehend. But if you are interested in VSH, and want to buy it cheap, I would suggest you look at Diodes (DIO) on the Amex. VSH essentially owns a majority of DIO already through the Chinese, which own 60% of the co. There is a discussion group (from people who know more than I do) about DIO in this newsgroup. I have posted a couple of notes detailing why or why not VSH would acquire the co. Neverthless, Diodes numbers are excellent, and probably represent the cheapest way to buy into a co. representing VSH's recent vision. But beware of DIO; its stock is extremely volatile, since it is a relatively small co. with about 60 mill. in sales. |
