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Technology Stocks : HDCO - Why sudden dip?
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To: Doug who wrote (422)3/28/1998 12:37:00 PM
From: rich evans  Read Replies (2) of 572
 
My rebuttal would be as follows: HDCOs main business is making boards not assembling them. Out of 800 million run rate, 100 mill is valued added manufacturing, the rest is making boards for sale to OEMs and other ECMS.HDCO has very small percentage of sales to ASIA. Asia manufactures of boards don't compete much over here in the complex high layer boards and now dont have the money to spend to get the tech and capability to compete in high layer boards. Pricing according to HDCO and others in the industry is flat and has improved slightly from the few percent decrease in previous quarters. Large debt can be serviced since it came from buying CCIR who's margins historically have been after taxes over 7%.So EBITDA should be fine once CCIR gets integrated which should be in about 3-6 months. Sales growth for HDCO is based on units shipped to any and all customers using circuit boards: both OEMs or ECMs and not dependent on pricing but units which are continuing to grow, But havings said these things, something must be causing this weakness in the boardmakers (look at PGTZ and DIIG) CCIR results last quarter were poor. So what is happening? I would guess its slower sales and push outs by SLR and JBIL but I see all this as temporary and a time to buy under the Warren Buffet price of hamburger analogy.

Rich
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