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Technology Stocks : CYPRESS Semiconductor (CY)
CY 23.820.0%Apr 16 5:00 PM EST
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To: jelrod3 who wrote (2092)1/22/1999 5:10:00 PM
From: James Rozell  Read Replies (1) of 2694
 
IC Works acquisition looks like a good move to me

item # 1: Based on the numbers

revenue (annualized) = 4 x 17.6 M = $70.4 M

revenue/share = $ 70.4 M/ 13.7 M shares = $ 5.14/share

at todays closing price price/sales = $9.50/$5.14 = 1.85

The SI profile lists CY P/S = 1.8 ; .... so in this respect, which is one valuation measure of CY stock, the deal may be very slightly dilutive.

In reading the press release is the $2.7 M profit actually the average of three quarters or the sum of profit for three quarters (?).
If it is the average then the 13.7 M issued shares would probably be additive to revenue as

avg quarter: $2.7 M/ 13.7 M shares = $.198/share

annualized: 4 x $.198 = $.79

item #2:

The ICW website describes the company as a Fabless semiconductor company. Some of the work goes to TSM. Therefore there are some obvious possible synergies. From CY point of view higher plant capacity utilization. From ICW point of view they presumably receive only 1/2 of the foundry chips or 1/2 revenue from TSM. Even if the sales do not increase, therefore, there should be a higher profit margin for these devices.

item #3:

Broadening and deepening of CY's product line.... less % dependence on commodity SRAM.

Questions: 1. How complementary are the two product lines ?
2. What % of ICW products are proprietary, if any ?
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