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Technology Stocks : Compaq
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To: John Koligman who wrote (35216)10/22/1998 1:52:00 PM
From: rupert1  Read Replies (1) of 97611
 
John: -OT- I know about LSI and its true that CRUS does not compare. But I think the CRUS story will be a radical turnaround situation with different power behind the board, different de facto CEO, massive restructuring ($505 mllion charge - its whole nominal capitalisation). Glad you mentioned the fab plants. They are getting rid of them. They cost 17 cents a share this last quarter. Without them the EPS would have been 24 cents instead of 3 cents. (In fact the EPS of the businesses which are being retained as core was 10 cents). I also think they will achieve all the efficiences from the $505 million charge without it actually costing that much. Meanwhile tney have about $335 million cash which is about $5.50 per share.

The risk is the general risks associated with the sector - but many commentators think that semis may have bottomed. CRUS has a special audio chip in the IMAC. I am not promoting it as a long buy. An interesting trade only. It has potential for takeover - the big shareholder Teo announced publicly about May that he had a buyer in the wings but wouldn't sell for less than $40 - but that may have been boardroom politics.

As I say worth looking at if you are cautious, as I know you are. I think it should see 10 1/2 in a reasonable time (but it may go lower first) and who knows after that (each way).

Victor
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