VTSS =? LLTC
I do not follow Linear Tech but you are probably right. It does look like another highly overvalued company. But then, many hi-tech, and in particular Semi companies are overvalued in a bull market. The higher they go the deeper the fall when the inevitable cycle ends.
===> "As for my estimates of Mature revenue I can see no reason why VTSS cannot reach $800M p.a. at current growth rates they are 5-6 years away from reaching it, but it is a viable target. They have a new fab opening that will go a long way toward
supporting this target."
You are much more optimistic than the company is! Even if the new fab runs at full capacity they will have roughly 3-4 times their current capacity with Fab I. Even if you assume that prices do not drop by then from current levels (and they will!, believe me they will) you have a $300M to $400M company tops. Yes, they can build another fab etc. but really, their market is not that large. In reality, they will probably reach $140 by the end of this fiscal year (October) and possibly $200 in 1999. Does this justify a valuation of $2B? maybe, but as I said, only in a speculative bull market. Not in the real world.
===> "if SiGe turns out to be the best for a given application, than
use it. I view their whole manufacturing section solely as a facilitator to their company roadmap".
The minute Vitesse abandon their niche of GaAs expertise they will be lost among the big guys with bigger manufacturing and design muscle. No, VTSS only claim to fame is their super fast process. When that is gone, VTSS is no more.
With regards to the take over possibility, I don't say that this is likely at current prices. But, when they drop back to $20, it may become attractive enough for a corporate take over. |
