HDCO - Why sudden dip? Message Board

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Technology Stocks : HDCO - Why sudden dip?

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To: kolo55 who wrote (457)	5/22/1998 12:26:00 AM
From: kolo55	Read Replies (1) of 572

My Comments on Hadco. I agree Hadco is selling at washed out price. But I think they have several quarters of trouble ahead as the recent price decrease pound the margins in their volume board biz. Backplane biz is doing great though, except for Malaysia plant. Key for them to get Malaysian revenues up and stop the losses there. Also new Austin plant will put a drag on earnings for several quarters. Finally the recent debt offering went at 9.55% (compared to expectations of about 8.5%). The higher interest cost on the debt means that Hadco earnings will be trimmed by about 10-15 cents a share per year. The Continental deal is diluting earnings, and it will take a while to work through the problems. So I expect flat to down earnings over the next several quarters. I'm not so sure that they will see the pick-up in the second half. And long term, I'm skeptical their revenues will grow well over the next several years. The market reaction today seems to be saying that there isn't a turn yet. Paul

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