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Technology Stocks : Phoenix Technologies (PTEC)
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To: John B. Dillon who wrote (3266)5/3/1999 9:10:00 AM
From: Mark Brophy  Read Replies (3) of 3624
 
Your assumptions could be wrong.

You used 26.6m shares, but that's only the basic number. The diluted number of shares is 28m. Jack Kay also believes "cash is king," so I doubt we'll see 10% of the shares retired. You should also assume the tax rate is 32%, not 30%. So, EPS = $17m / 28m share = $0.61. A small cap company that can't grow revenues or earnings will only fetch a 20 P/E, so the stock will rise only to 12.

Phoenix needs to use the cash hoard to buy some earnings similar to the RadiSys purchase of IBM ARTIC and/or retire 10% of the shares. Another possibility is a quick Merced ramp, which might be possible now that Intel is already in production with their 0.18u process. Jules and Fred follow Intel, so maybe they can give some insight about the Merced ramp.
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