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Technology Stocks : Alliance Semiconductor -- Ignore unavailable to you. Want to Upgrade?

To: DJBEINO who wrote (5024)	6/16/1999 8:37:00 AM
From: Woody_Nickels	Read Replies (1) \| Respond to of 9582

Thanks DJBEINO! This is what WE have known for years now. When chip sales turn profitable it can only add to the investment value of ALSC.

To: DJBEINO who wrote (5024)	6/16/1999 9:37:00 AM
From: Doug Simpson	Respond to of 9582

USC investment $589 million/41 million ALSC shares=$14.37 per share alone in the cash value for this investment. ALSC is currently trading at half of its cash value!!!!!!!!!

To: DJBEINO who wrote (5024)	6/16/1999 2:30:00 PM
From: g. barton	Read Replies (1) \| Respond to of 9582

Implied after tax book value is close to $14. ALSC's announcement today indicate a pre-tax increase in book value (based on yesterday's closing prices) of approx. $571 million, or $13.73 per share. On an after-tax basis, ALSC would have a book value of at least $13.00 (conservatively estimating a 38% tax rate, tax on a $571M gain would be $217M; but ALSC in effect has NOLs to offset $14M in taxes; so total after tax gain would be $571M - $203M = $368M; this is somewhat simplified, but should be roughly accurate). Add that $368M to ALSC's reported book value of $182M and you get $550M, or $13.22 per share. That's the implied after-tax book value based on yesterday's closing prices. As noted below, UMC closing up today implies another $0.46 per share after tax for ALSC (so total of $13.68). Of ALSC's additional pre-tax $571M (at yesterday's prices) not reflected on its last balance sheet, approx. $60M is due to the shares of Broadcom (Nasdaq: BRCM) that ALSC will receive, which had been previously disclosed. The other $511M results from the anticipated merger of ALSC's joint venture foundries, United Semiconductor and United Silicon, into the publicly-traded United Microelectronics Corp. The proposed transaction was first announced 6/14, and ALSC disclosed today the number of UMC shares it would receive. The day before the 6/14 announcement, ALSC closed at $6.21875. The UMC merger implies another $7.62 per share after-tax increase to ALSC's book value (62% x $511M / 41.6M shares outstanding), yet the stock has increased less than $2 since the announcement (and is trading for roughly $6 below the implied after-tax book value). If either or both of the SRAM and DRAM markets (ALSC's core markets) in fact are strengthening as analysts have reported (and last quarter was ALSC's best in two years), and ALSC's operations return to profitability, shouldn't ALSC trade ABOVE its book value? Seems like room for plenty of upside, and pretty solid downside protection. By the way, UMC closed today at 71.00 NTD (New Taiwan Dollars), up 3.50 NTD from the price used in ALSC's press release and the above calculations. The additional 3.50 NTD means that the 283.3M shares of UMC that ALSC will receive would be worth another US$19M or $0.46 per share after tax (= 3.5*283.3/ exchange rate of 32.36), less 38% tax provision). Assuming a constant exchange rate, every 7.66 NTD rise in UMC would be worth another $1.00 per share after tax to ALSC. And if the 38% tax rate is too high, that would suggest even more value after tax. Has anyone called David Eichler to ask about the tax rate?