Crony,
Hopefully, we are being set up for a nice run up. If, and it is a big if, the present price holds, we may have a double bottom setting up here. As we have all said before though, the volume is really too low to allow TA to be really accurate.
It looks like the naysayers are at it again on the rb board. They point to lack of share price appreciation since HB took over. Very interesting argument since they insist on looking at the share price exactly when new management took over, not taking into consideration that the bad news about further chip delays and significant loss of business would not be known for a while. If you look at how long it takes to make an nvsram and when the change took over, it would project into revenues until at least the end of the third quarter 05 or about the same time that the share price bottomed out at less than 30 cents a share. I believe that this share price is attributable to old management since it was their bad news. If you take a look at the share price since then, it has about doubled until the recent semi slow down has hit most companies. With all the news about how the company was doing from that time period being out, I am thinking that if old management had still been there, Simtek would not have been in business right now as a separate entity. I think that we probably would have been bought out by Cypress at a price below our present price since the company would have been in big trouble. If not, some very significant dilution would have occurred above and beyond what actually happened. That is just my opinion but I think an objective view of the facts make this a very likely scenario and is not a view based on loyalty to friends.
The HB salary issue is interesting. Is his salary high? Yes. Should it be lower? Probably. Has he been successful in putting Simtek back into contention? Yes. Is most of last years reported compensation actual cash? I believe it is about half cash and half option appreciation. So does this mean that his success has been because the company's share price is up? Yes. Did he take a company that had lost a third of its revenues in 05, tripled its revenues in 06 from 05? Yes. Did he take a company that doubled its loss from 04 to 05 and decreased that loss by 80% with proforma profitability? Yes. Did the company go bankrupt or get taken over at a lower share price because of how badly it was doing? No. If you look at these metrics, the HB salary conundrum that is being brought up by the friends of DM is not as big a deal and becomes more justifiable.
To me, it looks like HB has surrounded himself with a team that is set up to succeed and has positioned the company to succeed. The fact that he was able to negotiate a chip price increase at the same time that virtually no one else was able to alone might make him one of the most qualified and worthy ceos in the semi industry. Now, it might just take some more patience until the present semi industry downturn is over(which it might be).
We should be close to getting some info on second quarter 07 and guidance for the third quarter. You would have thought that if there was a problem with past guidance that the shareholder meeting should have produced this info but I don't want to be disappointed again as had happened so many times in the past under old management that I am not going there right now. Up till now, present management has been good about keeping a lid on inside info so I think the present trading pattern is a holding pattern until more news comes out. I think the uncertainty about chips in general have caused the gradual decline in share price from its highs of the year.
I don't know which way we are going short or long term but I am still betting long term on Simtek. Hopefully, present management will deliver on its promises. The fact that it appears that the biggest shareholders are still holding their shares(even buying a trivial amount more) makes me feel better about this short term price issue. If the company delivers, the short term price issue will be a thing of the past. If it doesn't, we will see a significant decline from here. Like I said, I am betting on the long term prospects of this company. But that is just my opinion and I am biased as a shareholder. If I was as negative about things as some are appearing on the RB Simtek board, I would no longer be a shareholder and move on. That is just my opinion also.
Good luck.
Neal |
