Food for thought:
I ran some numbers on the SOX last night and VLSI now has the smallest market capitalization of any SOX component. It also has fallen the highest percentage of any SOX component since mid June. This, I think can be attributed to the management shakeup. The market doesn't like Beyer leaving and Stein staying and I believe this knocked about 3 points off the stock. If Beyer hadn't left, I feel certain that VLSI still would have taken out support at 15, but it probably would have held at 12 and not traded below book value. The following data backs this up.
VLSI is trading at the lowest price to book (0.82x) of any SOX stock. The next closest are NSM and LRCX (both 0.86x) but they both lost money the past two quarters and have already warned that they plan to lose more the next two quarters. No other company in the SOX is trading at at price to book of less than 1 other than VLSI, NSM, and LRCX. The three highest price to book ratios go to LLTC (5.98x), INTC (5.95x), and XLNX (4.42x). The average for the SOX is 2.47x.
VLSI is trading at a price to sales of (0.69x) and only LRCX (0.48x) and NSM (0.64x) are lower. The only other two SOX stocks that are trading at a price to sales less of than 1 are MOT (0.94x) and AMD (0.95x). The three highest price to sales ratios go to LLTC (8.8x), INTC (5.3x), and XLNX (3.9x)
At 8.4x trailing earnings, VLSI has the lowest trailing PE ratio of any SOX stock. Five of the companies have negative PE ratios and the highest goes to TXN, LLTC, INTC, and XLNX in that order.
This data demonstrates that the market has punished VLSI more than any other SOX component. One might think that it is due to smaller market cap stocks getting hit more than bigger market cap stocks but this does not hold true in general. For example, LSCC has the third smallest market cap ($602.6 million) of the SOX and it is trading at a price to sales of 2.6, price to book of 2.6 and trailing PE of 11.6. The fourth smallest market cap goes to NVLS ($978.0 million) and they are trading at a price to sales of 1.6, price to book of 2.9 and trailing PE of 12.2. The SOX stock with the second smallest market cap is LRCX ($504.0 million). VLSI has a market cap of $458.9 million as of Friday's close.
In addition to this data, it's important to note that VLSI broke major support at 15 when the news about Beyer leaving got out. It then broke more support at 12 when the SOX broke down last week. I think the market is sending Stein a signal. If you want to increase shareholder value, then give up control of the company to somebody who Wall Street respects. |
