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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Return to Sender who wrote (1683)	1/21/2002 12:13:59 PM
From: Crossy	Read Replies (1) \| Respond to of 95572

RtS, MSCC .. I like its valuation vs. its peers. MSCC is in Power Semis, Compound semis (GaAs, InGaAs, InP), linear chips and mixed signal applications. Operating Margin 10%, Net profit margin 7%. Gross margin >55%. Price/Sales 2.7 Now of course LLTC has a higher net profit margin with 41%. But its Price/Sales ratio is a whopping 18.7. It's a matter of fact that high PSR goes hand in hand with high net margins. Exactly this is why I don't think LLTC has huge upside on its own merit (other than demand pick up). Since the gross margin of all semis of one area are pretty similar it all boils down to R&D and SG&A expenditure levels vs. sales. Also a function of scale. Look where MSCC was 2 years ago. Their net margin was a meager 2% and PSR was 0.7. In MSCC you in fact place a bet on further margin improvements as they execute their strategic game plan (was posted as a powerpoint slide on their site months ago). For me the choice btw. LLTC and MSCC is clear - between the two I'd side with MSCC. However I still do think there are other firms out there with an even more attractive valuation: like CTS, AGR.a, CLTK and some others.. rgrds CROSSY