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

To: Maverick who wrote (1063)	8/16/2000 11:54:34 AM
From: Just_Observing	Read Replies (1) \| Respond to of 1184

Merrill Expects PE Expansion for TER Aug 16, 2000 Teradyne (TER, $62 1/4, D-1-1-9) 00E $3.10; 01E $4.00 • Today, Teradyne announced that it will acquire two California based companies in the printed circuit board industry. Herco Technology (San Diego) manufactures printed circuit boards and Synthane Taylor (La Verne, CA) supplies PCB laminates and is a major supplier to Herco. • We view these acquisitions as positive for the company. The contract manufacturing business is 27% of Teradyne’s revenues and growing at a compound annual rate of 60%. We estimate operating margins of this business to be in the range of 16-18%, higher than comparables like Solectron, Flextronics, or Sanmina. As these companies are trading at higher valuations (35x 2001 estimates) versus Teradyne’s (15x 2001 estimates), we would expect further P/E expansion from Teradyne. (B. Hodess)