Here is an interesting article. Another indicator that the industry is good. Lets see, mutual funds want to buy XICO, but we only have a float of maybe 18mm shares and the tight fisted ones like me and those 10 people I know have no intention of selling ours. Maybe we need more shares? But I don't want to get too carried away, we need to get to $40 before it makes sense for the company to do a split.
Anyone besides me think that maybe SNDV goes to strong buy and raises their target to $40 by the end of April 2000 and shortly thereafter XICO does a 2 for 1 split?
OK, I'll get back to my level 2 screen and stop posting this type of nonsense.
Sorry
Stock splits are latest indication of semiconductor recovery
By Bill McIlvaine
Semiconductor Business News
(12/26/99, 03:20:02 PM EDT)
NEW YORK -- If you still need convincing that the semiconductor industry has made a major comeback from its "crash of 1998," you should consider the stock split.
Semiconductor makers and their capital equipment suppliers have been splitting their stocks in growing numbers in recent weeks. According to analysts and industry observers, the action may may be just beginning. The practice reached a peak in mid-December. KLA-Tencor Corp. announced a two-for-one split, while Xilinx Inc., the San Jose-based programmable logic maker, split its stock for the second time this year.
At the same time, Kopin Corp., a Taunton, Mass., maker of gallium arsenide (GaAs) wafers and liquid-crystal-on-silicon (LCOS) microdisplays, reported it was increasing the amount of its authorized common stock from 20 million to 60 million to accommodate a two-for-one stock split announced earlier in December.
Two chip companies split their stock on Dec. 15. TranSwitch Corp., a Shelton, Conn., fabless supplier of Internet connectivity ICs, reported a 3-for-2 split, while Siliconix Inc., a subsidiary of Vishay Intertechnology Inc. and a producer of MOSFETs and analog ICs, declared a 3-for-1 split.
This trend may reflect a bigger recovery than investors had expected a year ago, when chip stocks were languishing (see story from the Nov. 15, 1998 online publication) and the prices of capital equipment stocks were downright dismal (see related story).
During the past 18 months, the average price of chip stocks has roughly tripled, and many of them have even quadrupled or quintupled, says A.A. (Tad) LaFountain, semiconductor analyst at Needham & Co. in New York. Splitting stocks, he says, "is a logical result of a very pleasant upward turn in the stocks," LaFountain states.
That upward movement turns out to be spectacular in some cases. "Many of these stocks are approaching -- and even exceeding -- $100 a share," notes Tim Summers, semiconductor equipment analyst at Advest Inc. in Chicago. "Lam Research, which was [as low as] $7 in 1998, is now up to $92." He says he wouldn't be surprised if other capital equipment companies such as Applied Materials, Novellus Systems, Lam Research, and ASM Lithography split their stocks soon. "Applied is up to $113," he notes.
As it turned out, Novellus on Dec. 17 announced a 3-for1 split of common stock, to take effect Dec. 30. Robert Smith, executive vice president and chief financial officer of the San Jose-based deposition-systems maker, said at the time that, "We feel a stock split at this time provides Novellus with a good opportunity to increase the availability of shares and potentially broaden our base of shareholders.
During the chip industry's "depression" last year, semiconductor capital equipment stocks were battered even more than their chip-maker customers. The stock price of KLA-Tencor, San Jose-based wafer metrology systems maker, was down as low as $23 as late as October. On Dec. 17, it was trading as high as $101, before pulling back a bit and closing at $96. That kind of movement puts a stock at a level that prices a stock out of the range of the retail investor, points out Summers, "or at least that's the perception of the companies' management."
Gus Pinto, senior director of business development in corporate marketing at KLA-Tencor, maintains that stocks priced above $100 a share often are not purchased by mutual funds. Increasing the number of stocks by splitting them brings the per-share price down and "makes the retail investors feel like they can participate," Summers points out.
"If [a stock price goes] above $100, it will be seen as too pricey," Pinto comments. "It's not just capital equipment and semiconductor stock," he says. That goes for other companies such as GE and Microsoft which also have split their stock recently., he says. "All of these companies have hit $100 [per share], and if you want to maintain liquidity in the stock market and have a lot of people buy your stock, you must keep the price within their range."
Needham's LaFountain agrees. Many investors buy stocks in round lots of 100, he notes, so a $80 or $90 stock price translates into an $8,000 or $9,000 purchase. "[But] if you keep a stock in the range of $20 to $40, a round lot isn't quite so onerous," LaFountain believes.
But a split sometimes keeps stock moving up. "There is often a positive pull on the price when a company announces a split," observes LaFountain. Kopin's stock, which was trading at $38 in October, hit $80 when the split was announced on Dec. 9.
Siliconix also kept going up after it split. Its stock shot up from $89 to $128.50 on Dec. 16 after it declared a split, then closed the next day at $135. The Santa Clara, Calif., chip maker is increasing the number of its authorized shares from 10 million to 100 million.
With this kind of price movement, says Advest's Summers, for most chip companies splitting a stock becomes a "question not of if, but when." |
