Fred, I think your explanation makes a lot of sense.
Essentially, SoundBlaster is a big brand name in the PC industry, Creative has been quite profitable for more than a year, it is weathering the Asia crisis well (at least so far), and the price to earnings ratio is very low (compared to almost any other tech stock).
The real key to make this stock take off will be top-line growth, which the company is indeed struggling with.
Certainly, Intel would make a great suitor, but there would probably be problems with the DOJ. Other possible suitors that come to mind are: Micron (struggling with falling memory prices), Compaq (hands full with swallowing Digital), IBM, Seagate (too many problems in hard disk sector), Sony, Toshiba, Hitachi, Fujitsu, National Semiconductor (problems integrating Cyrix). Of all these, I like Sony -- integrating Sony Sound or Sony Multimedia into your PC just sounds good (no pun intended) to me.
However, I don't think we are going to see any kind of acquisition soon. I am eager to see top-line growth during 1998, and am prepared to believe this quarter won't be particularly good for Creative, but expect a good second half... |
