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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (18115)	12/5/2003 7:11:51 PM
From: jeffbas	Respond to of 78498

Paul, I put my money where my mouth is and also added at the end of the day yesterday. I see downside risk to $4.00 where I would add more. However there was an 8,800 share bid at $4.40 all day today (visible on Level II) that no one touched. I am comforted that in Q3 "the Company repurchased 34,893 shares [roughly 1%] of its common stock at an average price of $3.80 per share" (10Q). The company sees the same value I do, under tangible book value of $5. I also think at this stage of the cycle receivables are good and inventory may actually be creeping up in value. I also loved this from the quarterly report, "The strengthening of market conditions has continued into the beginning of the fourth quarter with sales and bookings reaching levels we have not experienced since the first half of 2001." They did $130M and 100M sales the first 2 quarters of 2001, versus $83M in Q3 2003. Taking the midpoint of $115M, they should be reporting that level before too long, if not in Q4 because of the holidays. That level should be worth quarterly EPS of 25-50 cents. Furthermore, with the SIA (Semiconductor Industry Association) looking for a 19% growth in sales for 2004 over 2003, peak sales of $125+M seems to be a no-brainer - where SEMI would make maybe 50 cents as a single point estimate for a peak quarter. Also note this from the quarterly release, "the Company is continuing to explore avenues to accelerate its presence beyond the boundaries of North America". The inference from the preceding sentence about growth being "particularly in Asia" is that they might be considering doing something there. I have zero knowledge of what they might be "exploring". However, if "low float SEMI" and "China" were ever to appear in the same sentence, you can imagine what might happen. Although the stock hit nearly $25 in the last cycle ending in 2000, I am much more modest this time, looking for $10-15 sometime in 2004. (I also don't like the D/E. That is a key reason you don't want to own it in an industry downturn.)