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Technology Stocks : MEMC INT'L. (WFR -NYSE) The Sleeping Giant?
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To: Bruce A. Thompson who wrote (4105)1/4/1999 2:38:00 PM
From: Zeev Hed  Read Replies (1) of 4697
 
Bruce, the rights will be offered between $9 and $10 (so they say) for calculations they assumed 9.25. There will be 62.1 MM shares outstanding (and some 1.7 MM options) and the net book will be $564 MM, thus the book value after the exercise will be $9.08. If you take out some $40 MM in intangibles and good will (but we'll have to check at year end if some of it was not taken out with the last $140 of write offs), the book value is about 8-3/8 or so. Now come the real trick, how much money have they lost in the current quarter? My guess is somewhere around $60 MM, which will bring the adjusted net and tangible book value to $7-3/8. The next question is what is the earning power of this outfit, and I think it is pretty close to $120 MM annually if some pricing power is reestablished and they work at 80% or so of capacity, and could go to $160 MM if we are very optimistic and say that they can reach sales 50% higher then their last peak (or about $1.6 Billions) and the market is tight.

These very optimistic numbers will not be reached in my opinion for at least six quarters from now, but that could still put us in line for a possible $50 per share on 15 times looking forward $3/share. Do not make a big bet on that one, since despite my short term pessimism on WFR in the last 18 months or so, I was wrong as to how bad it really would get (I had a worse case of $10/share if you guys remember), and history clicked a print at 2-15/16 last October.

Zeev
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