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Technology Stocks : C-Cube
CUBE 36.64-0.5%Dec 5 9:30 AM EST
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To: JPM who wrote (26510)12/11/1997 3:43:00 PM
From: John Rieman  Read Replies (3) of 50808
 
Cube's current cash isn't needed for R&D, unless revenues drop drastically. Cube has managed to pay for R&D out of current revenues. They do need to keep some cash, but current levels are too high. They will need to do something with it. Here's my list of uses, in the order that they would do the most good:

1. Buy back the bonds. Cube has issued convertable bonds with a strike price just under $31. They represent 3 million shares in the future. It would cost $90+M to call them, but worth it. The interest rate is under 6%, Cube might think it's cheap money.

2. Acquire another company to add product lines(ala Cisco). Is there another Divi out there?

3. Securing fab space. Some companies need to pay in advance for fab space. Hagedorn didn't have to pay Tiawan Semi the second installment, but ESST did.

4. If their is no better use, a share buy back is inorder. I prefer the other three though.
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