Alliance Semiconductor Shares Rise On Rating Upgrade, Buyback
NEW YORK -(Dow Jones)- Shares of Alliance Semiconductor Corp.
skyrocketed Monday after Lehman Brothers Inc. raised its investment
rating on the stock to "outperform" from "neutral," citing its price.
In afternoon trading, shares of Alliance (ALSC) were up $1, or 39%,
at $3.563 on volume of 5.8 million shares, compared with average daily
volume of about 445,000. It was one of the Nasdaq's most-active issues.
Although Alliance's stock recently had been trading for less than $3,
it has as much as $10 a share in pretax cash value built into it from
Alliance's investments, Lehman Brothers analyst Michael Gumport said in
a research note.
"We see easily $6 and perhaps as much as $10 per share of pretax cash
value in ALSC's joint venture and foundry equity interests," Gumport
said. His 12-month target price remains unchanged at $9.
Alliance has investments in two Taiwan-based joint ventures - United
Semiconductor Corp. and United Silicon Inc. - and a stake in Chartered
Semiconductor Manufacturing Ltd. of Singapore.
An Alliance spokeswoman said the Lehman note, along with the
company's planned buyback of two million shares, announced Friday after
the close, were driving the stock's climb. The company currently has 40
million outstanding shares.
However, the memory chip company's fundamentals continue to be
negative because of difficult market conditions. The company is expected
to lose 4 cents a share in its first fiscal quarter which ended
Saturday, according to analysts.
Last month, Alliance said it expects its fiscal first-quarter revenue
to be below the $28.3 million reported in the fiscal fourth quarter
ended March 28. The company attributed its lower results to dramatic
declines in the prices of dynamic random access memory, or DRAM.
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