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

To: Pam who wrote (42924)	1/23/2009 11:45:56 AM
From: cluka	Read Replies (2) \| Respond to of 95531

Pam, WFR has 8k metric tons of poly capacity. It makes no difference if this is later turned into wafers or not, revenue is based off poly price. Say WFR sells this at a very conservative price of $75, that is $150MM in revenue/qtr. They have also indicated that there is no issue with volume going to solar. That to me means they should not have issues selling this production. Why are they then projecting only $200MM in revenue? After conference call only thing I can say is they are being very conservative. There is a good reason for this, economy is shockingly unpredictable. In such climate it is easy for you to claim they will have operating loss in Q1. However, even at these very conservative estimates WFR says it won't happen. Btw, they also believe they have superior cost structure to the competition, something you claim they don't. It is also important to note $1.4B in cash or $6.25/share. They also have $300MM in LoCs which adds up to $7.50 cash/share. They also believe there is no way they can be cash flow negative. How shall we value WFR? Clearly you will not except a possibility that business will ever uptick so you want to value it at liquidation cost. Even then it should be over $10/share. I have positions in LRCX and KLAC, how do I value them? Certainly not by what earnings will be next qtr. If I apply similar principle to WFR, I would consider it it good value under $20.