If the MXL deal closed today, SIMO would go up 57%.
I guess that means most investors think the deal will not go through.
It seems we won't know the answer to whether the deal will go through or not for probably 8-16 months.
If the deal was called off today, I wonder where SIMO's share price would go? I don't really know, since it's hard to tell what's going on with SIMO as they haven't given forward guidance since January 2022.
Since the dividend likely doesn't get paid again until the deal result is announced, SIMO's probably going to generate and keep a decent amount of cash ($70m per year saved by not paying a dividend). Also in 2023 they will likely finish building their new headquarters, and the "sale and leaseback" which follows will also generate a significant amount of cash. I don't know if a sale and leaseback applies to just the building (~$75m) or the land and building (~$130m). Either way, it's a healthy cash infusion.
Ho hum, waiting a year is sorta tedious, and we're not going to know if it's a good idea until the outcome is known (deal or no deal). SIMO has probably held up better than a lot of semiconductor stocks depending on what date you start measuring. And the SIMO valuation now off of reasonable 2023 EPS Is probably below 10x, maybe even as low as 7x or 8x ex-cash. That's cheap, but with the consumer (PC, cell phone, low level electronics) focus I doubt SIMO ever gets a decent PE.
Best possible outcome for SIMO shareholders is the market continues to crash badly for another year, and then the deal goes through! We'd get a cash infusion when other tech stocks are also super cheap. Lets see what happens..... |
