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Technology Stocks : HDCO - Why sudden dip? -- Ignore unavailable to you. Want to Upgrade?

To: rich evans who wrote (570)	11/28/1999 9:36:00 PM
From: rich evans	Read Replies (1) \| Respond to of 572

Hdco reported a very good Q4. But said that Q1 would be 5-7 mill less revs and little under60 cents likely in pershare earnings.They mentioned the -10 days of production during the holidays but later indicated that the VAM was having pushouts in Q1 which would be about the 5 mill expected in lower revs. Stock reacted I think to this short term situation. Management says confortable with $2.80 in 2000 but this seems low based on projections of growth in midteems in revs, increasing gross margins after Q1 to probably around 17.5 and SGA around 23 mill. Interest charges are 7 mill perquarter. They paid down debt 76 mill in 99 but expect only 15-20mill pay down in 2000 with increased cap ex about 95 mill and 9-10 mill in R and D. Still this should give them at least $3.00 pershare IMO for 2000. Q/T facility at Austin which they got from Continental Acquisition still loss but hope to get it profitable by Q3 in 2000. The rest of the plants are doing well and Malaysia is now doing well finally. ECMs are 52% of business and not expected that FLEX-DIIG deal will impact their revs. Market doesn't seem impressed though with a 15PE forward and low PSR . Don't personally think a ECM would buy Hadco as they are a volume shop which is over 85% of their board revs. Quickturn is only 26 million.Therir back planes were only 42 mill. But maybe another Board company would buy them. But if you factor in the debt and give them a PSR of about .8 then a buyout would be at 1.16 Bill revs and 14 mill shares only about $66 by my calculations. Rich