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Technology Stocks : VLSI Technology - Waiting for good news from NASDAQ !!!
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To: orkrious who wrote (4137)8/21/1998 3:30:00 PM
From: DanZ  Read Replies (3) of 6565
 
Jay,

I bailed at 12 3/16 yesterday because the stock closed weak and I thought that I might be able to buy it back at the same price or lower today. As it turned out, I'm back in at 11 7/8 after watching it for the better part of the morning. It's trading at book value now. Who would have thought that this company would trade at book value? If it doesn't hold here, the next chart support is between 10 and 10 1/2. I sure hope it holds here. The SOX has resistance between 243 and 247. I don't have a lot of confidence that it will get through there but I'm planning to hold VLSI until the SOX turns down or the stock gets weak again. For now, it looks ok but I'm expecting resistance at about 13 1/8 if it rallies.

On a side note, and not to bring up sour grapes at a rough time, but I heard from a very reliable source that the deal with LSI was on inked and only needed approval from VLSI's Board of Directors. Our pal Al stepped in and killed the deal because he didn't have enough control over the proceedings and the merged company. It's a very long story, but basically Al is letting go of control of VLSI very slowly. Apparently he doesn't think anybody can run the company but himself and when new blood comes in and tries to accomplish things, he puts his foot down to exert himself. Apparently Beyer went around Stein to the Board and the Board sided with Stein and fired Beyer.

I'm going to get on my soap box one last time because I'm really bitter over what happened here. With all the uncertainties in the economy, and especially in the semiconductor sector, accepting $28 a share was a blessing. How long will it take the stock to recover to 20 much less 28? Not only that, but one will need more than 28 whenever it gets there (if it ever does) because of the time value of money. Let's say that it takes a year to get to 28. Assuming a 20% annual required rate of return for an investment in VLSI, the stock would have to get to 33.60 in a year to compensate for the additional one year holding period. That means that the stock has to nearly triple from here. Mr. Stein did not act in the best interests of the shareholders and anybody who was long this stock at the time suffered as a result.
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