Thanks, Paul. I, unfortunately, am more familiar with the semiconductor industry than I would like. Although I am not
particularly familiar with Orbit, my feel is that it may be
nearly worthless.
In fact, the problem with semi companies is that they have to spend
15% of sales or more on R&D plus make continuing material capital investments just to stay in the same place competitively. This is an order of magnitude more than is required for ECM companies. Unless having Orbit really does give DIIG some strategic advantage, which I doubt, it will continue to require more time and resources, with little return and possibly/probably continued losses, than management should sensibly commit. I would not be surprised if it were eventually sold or closed down.
In view of your remarks and the above, I will do nothing in the stock
unless it gets materially cheaper. It is unfortunately a fact of life
when you have a weak market in ECM stocks that you can get the major companies at very good valuations, so it requires extraordinarily
cheap valuations to buy ones with real blemishes.
Furthermore, as was pointed out quite a while ago (to my sorrow, since I did not pay close enough attention), the majors (SCI, SLR, JBL, FLEXF) are much better situated going forward. Therefore, even if you buy one of these problem companies at a great price, from any longer term perspective you might get a great return on it, but you will likely have gotten an even better return on a major - with less risk to boot. |
