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Technology Stocks : E*TRADE IPO Alert - Y2K and Beyond (EGRP) -- Ignore unavailable to you. Want to Upgrade?

To: Captain James T. Kirk who wrote (4574)	4/11/2000 10:31:00 AM
From: Jim B	Read Replies (1) \| Respond to of 10270

maybe we'll get lucky and the reconfirm window wont open up until AFTER DDIC is already trading then we can see if we really want it or not... here's the writeup on DDIC from ipoisland.com and actually the fundamentals are surprisingly strong... it has some of the right buzz words... networking, communications, manufacturing.. but it may just not have the sex appeal because they are almost making a profit... losses have been trimmed considerably while revenues are exploding... definately something the market seems to hate these days.. lol DDi Corporation (DDIC) About: DDi Corporation is a provider of manufacturing services to both original equipment manufacturers (OEMs) and electronics companies. The company specializes in the field of the production of complex circuit boards and other components for networking and communications gear. The company offers value added services such as on-campus design services, manufacturing consultation with the customer's R & D division, and more. Currently DDi maintains two production facilities both in California. Key customers include Alcatel, Nokia, Cisco Systems, IBM, Motorola, Marconi Communications, and others. Key Competitors: Solectron, Flextronics, ACT Manufacturing, EFTC, SCI Systems Financial Information: 1998 Sales: 174.9 million dollars 1999 Sales (for the nine months ended September 30): 213.8 million dollars 1998 Net Income: Loss of 52.1 million dollars 1999 Net Income (for the nine months ended September 30): Loss of 12.2 million dollars IPO Information: Range: 15 to 17 Float: 14.69 million shares Post-Offering Shares: 41.37 million shares IPO Valuation (based on a price of 17 dollars): 703.29 million dollars Underwriters: Lead: Credit Suisse First Boston Others: Robertson Stephens, Chase H & Q, Lehman Brothers Analysis: Although this deal cannot be deemed a traditional company it is very much in the mold of an old-line technology company rather than many of the young start-ups currently coming to market. The electronics manufacturing services sector, in which DDi operates within a sub-sector is currently growing at a compound annual growth rate of 20%, and is projected to continue growing at that rate till 2003, when the market for electronics manufacturing services is projected to reach 149 billion dollars. While there are multiple companies operating within the space, competition isn't as intense as it may seem due to the large market and huge global demand for electronic circuitry production. The company's sales growth is very strong with nine month sales during 1999 already surpassing those of 1998. More importantly despite the increase in sales, losses have plummeted and therefore there are strong indications that DDi will make money somewhere in the relative short term. The deal's underwriters are excellent, led by one of our favorites in Credit Suisse First Boston. This team should easily be able to sell the rather large sized float of 14.69 million shares, yet a key question could be there ability to support the deal on day one, should things turn sour. Credit Suisse does have a rather good track record at that, so our concerns while there aren't significant. The deal's primary negative aspect is in terms of valuation. Most of DDi's competitors trade at a price to sales ratio of around 2. Based on this ratio DDi should be valued at about 350 millions, based on last year's sales, which is nearly half that of the valuation should DDi price at the high end of the range. Yet that 350 million valuation projection isn't actually correct when you factor in such elements as the fact that DDi operates in the fastest growing sub-sector of electronic manufacturing services, communications and networking, and the company has a huge and stable base of top tier customers. Our projected valuation is with a price to sales ratio of 6, meaning a market capitalization of about 1.1 billion dollars, or about 50% above the current valuation. Overall expect a solid yet rather quiet IPO from DDi.