*AV*--IPEC Warning. After the close of the market today, a story came across the wires suggesting that the high volume and price action of IPEC today was, in part, due to takeover speculation by LRCX. Both companies would neither deny or confirm the rumor. The story said the rumor started on a Stock Rumor website and has spread enough to attract some speculators.
While we might even be the Stock Rumor website<GGG> or the rumor will be reality, is not the issue right now. What is important is that IPEC has gotten some visibility and can be affected in either direction. In other words, we might get some action on "herd mentality" for better or worse.
To the heart of the rumor, LRCX and IPEC. This is actually a very good fit and does make sense. IPEC uses the LRCX(ONTK) backend cleaning station for their complete CMP tool suite. There is a nice cooperative effort between the two. A merger is in there best interests if they want to bring the AMAT competition up an notch. This could be a win win situation for both, especially going forward into the upcoming 300mm technology shift. This could help oddset the troubles LRCX has relative to marketshare, upcoming revenues and earnings, along with the Asian Crisis.
The bad news is that we already know how bad things are at LRCX and an acquisition at this time does not make good business sense. They are in the midst of laying off people, shutting down facilities, getting out of some businesses, and cutting back on certain R&D functions. The timing is real bad for something like this and Jim Bagley is too smart to attempt this at this time. Furthermore, something like this would be more appropriately orchestrated closer to the July Semicon West timeframe. So if indeed there is any truth to these rumors, I would think it would be closer to July than now, especially with the quarterly earnings and the forward looking uncertainties. Bad business to do it now. It would be a great deal for the IPEC shareholders if a stock swap occurred but it would be of greater shareholder value to allow IPEC to finally capitalize on the CMP marketplace as it takes off in the next 2-5 quarters, big time. Again, poor timing.
With all this said, you all know the expresion, "where there's smoke, there's fire." Let's not get burned and let's not get suckered on this. And if it is true, let's make sure we don't do anything foolish that we will regret. Bottom line: IPEC may be in play so we need to tread slowly and cautiously and respond as events unfold, no matter what they may be. Let's be careful out there since IPEC was at $14 not too long ago.
Andrew |
