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Technology Stocks : Stock Swap
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To: Andrew Vance who wrote (14514)6/23/1998 4:58:00 PM
From: Yiqun Xie  Read Replies (3) of 17305
 
Enough has been said on this thread about potential of ASYT, but the stock is not performing yet. Is the time mature for management to announce a stock buyback program? Here are my reasons why it is a prudent choice:

1) At the end of 3/31/98, there are $12M cash and $70M short term investment (total $82M) on its balance sheet. At $13/share today, the company can afford to spend up to $20M or more to buy more than 1.5M shares. That is more than 10% of outstanding shares.

2) Even the current June Q may be slower than the last record Q, nobody anticipate loss for this Q and the Qs ahead. Cash flow is very healthy so there is no worry to preserve working capital.

3) New fabs for 300mm are pushed out further so I do not expect that the company will need large amount of working capital to develop new products now. Current business with existing 200mm fabs are established and expanding.

4) On Sept. 30, 1997, the company completed a private placement of 1M shares of common stock for $42.92/share. The company got $42.9 million from the proceeds. Even the company takes 1/3 of the money, it can buyback the whole 1M shares back. Would it be nice to get $28M for nothing? The company can sell this 1M share again later.

5) The "short term investment" should be some liquid debt investment. At current ASYT stock price, probably it is better investment to buy its own share.

6) If this stock is misunderstood by the Wall Street as AV said, a stock buyback program is a good thing to do to boost investors' confidence.

I have no idea why the company is not doing so. Any comments?
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