>So what then would it be worth? If we model it relative to WDC then on a Price to Book basis we see a 5 year range running from 1.1 to 4.3 presently sitting at 2.8. That would give Maxtor a market cap somewhere in the 400-500 million range. On a price to sales basis WDC has a range from .12-.65, presently sitting at .34, in the middle. Maxtor had 1.4 billion in sales last year and once more that yields a market cap in the 400-500 million range.
Well, let's see. WDC had a fully diluted 94 mln shares last time they had positive earnings. Add in 19.4 mln from the convertible zero deal, and you get 113.4 mln. Multiply by 15.5 and that's a market cap of $1.8 bln or thereabouts (this is sort of not kosher, as I'm adding in the converts below the strike price, but what the hell). Anyway, if you annualize the really bad Q1 rev number of 830 mln, you get a P/S of more than 0.5.
>You mentioned treatment which might be afforded convertibles earlier.
I would think they would be just thrilled to see fresh junior money coming in to fill up that 219 million dollar hole. Conversion has to be the last thing on their mind.
Exactly. If they just move from pure junk to sorta junk, that would be a huge capital gain. Alas, it was late afternoon Friday, so broker never came through with a quote.
>Anyone see another way to get at valuation here? Should Maxtor trade at a relative premium or a relative discount to WDC and why?
Premium. All I know is, Maxtor has been eating WDC's lunch. It remains to be seen how the IBM deal figures into this, though. |
