I think best thing to do for CYMI is to buy back even more shares.
In 1997 they made $34.566million before taxes which means return on assets is 9%. They also got a great deal with convertibles.
(Interest on the notes will accrue at the rate per annum of 31/2% from August 6, 1997 through August 5, 2000 and will accrue at the rate per annum of 71/4% from August 6, 2000 to maturity. The notes will be
convertible at a conversion price of $47into approximately 3.2 million
shares of Cymer, Inc. common stock.)
I am looking at ROA(9%) since interest on convertibles is tax deductible. ROE is 20.9%(after taxes). I believe they should buy back even more shares and get more debt since it is so cheap. They already have enough inventory, due to temporary demand slowdown they don't have to spend more cash for inventory. Also most of the capital spending has already been done. Even if they loose money next quarter so what! Real show has not started yet, in order to stay competitive everyone has to upgrade to .18 soon.
They have $130million cash, they should use it on the most attractive investment which is CYMI stock. Until now management ignored the stock holders, finally they are giving some attention.
Look at AAPL, DELL and ORCL, CEO's of these companies are acting like football coaches, encouraging wall street all the time about prospects of their companies and wall street is responding back.
I am confused as to why an analyst would ask why they would not use their funds to buy back the depth.
Is my logic flawed?
Any comments? |
