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

To: Donald Wennerstrom who wrote (39794)	8/4/2008 12:30:47 PM
From: Donald Wennerstrom	Read Replies (1) \| Respond to of 96005

Kulicke & Soffa seals two deals By CRISSA SHOEMAKER DEBREE Bucks County Courier Times Fort Washington-based Kulicke & Soffa Industries Inc., which supplies materials to the semiconductor industry, announced two deals Friday that it said would increase its profitability amid rising raw material prices. The company said it will sell its wire business, which has been profitable but capital intensive. And it will acquire the assets of Orthodyne Electronics Corp. of California, a company that provides materials used in everything from industrial electronics to hybrid electric vehicles. Kulicke & Soffa will fund the acquisition of Orthodyne with 7.1 million shares of its common stock and $80 million in cash. W.C. Heraeus GmbH, a precious metals and technology group in Germany, will buy the wire business for $155 million in cash. Both deals are expected to close in 60 days. Kulicke & Soffa chairman and CEO Scott Kulicke and Maurice Carson, the company’s chief financial officer, said the wire business had become too capital-intensive because of the rising price of gold, which is used to make the wire. “Wire has been a profitable business for us,” Kulicke said. “Unfortunately, increases in market share, or even simply servicing industry growth, would require further investments in working capital. We already have more than $90 million invested in working capital supporting this business and are uncomfortable increasing this commitment.” Orthodyne, a private company with 280 employees, reported $110 million in revenue last year. In its previous fiscal year, Kulicke & Soffa reported $700.4 million in revenue, a gross profit of $180.9 million and a profit margin of 25.8 percent. Those profit results without the wire business and with Orthodyne would have been $481 million in revenue, with $220.1 million in gross profit and a margin of 45.9 percent. The agreement with Heraeus includes a technology partnership centering on the wire business, Carson said. “We believe that, with these actions, we are increasing KNS’ future profitability,” Kulicke said. “We’re strengthening our balance sheet. We’re opening up new avenues for growth. And … we have strengthened KNS’ position as a leader in the semiconductor equipment marketplace.” phillyburbs.com