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Technology Stocks : UTR -- time for Unitrode to rise
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To: Shane M who wrote (97)5/17/1998 9:15:00 PM
From: shane forbes  Read Replies (2) of 119
 
Shane:

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Re: Was not aware of the loss of WDC

Hmm... I did not mean that WDC is gone. I meant that part of WDC's business seems to have gone elsewhere. Check the 10-K:

for last Q4 (trouble):
- Revenues from motion control products declined 10% due to reduced demand, particularly in the fourth quarter, from one of the Company's
major customers, a disk drive manufacturer. The decline was principally due to excess customer inventories, as well as a
reduction in the share of business awarded to the Company by this customer

for this Q (there is hope):
- A significant portion of the decline is due to continuing weak demand from the Company's largest customer, a disk drive manufacturer, as well as a reduction in the share of business awarded to the Company by this customer because of delays in the qualification of the latest product revision manufactured at an outside foundry. The follow-on revision of this product is being qualified at a new outside foundry in Asia.

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Re: They were trading at a discount to UTR at the time, and may convert at a rate greater than 1:1 if UTR is trading under $16 at the time of the merger. (Not sure of the details, but I'll get at least a 1:1 conversion as long as UTR is under $24, which seems likely).

I think the 1:1 looks good BUT there is one big proviso - the conversion ratio is based on the average price of UTR over some (unspecified) period not on the price at the time of the merger. The conversion ratio will be as high as 1.33 and as low as 1.00 depending on what the average price is. Therefore if you are a BMRQ holder, should one actually hope that UTR stays low (as long as it does not get too low)? (to get the 1.33 conversion: 15 * 1.33 = 20 - of course who knows what the "period" is.)

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Shane. (thanks for the est. merger date)
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