Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Creative Labs (CREAF) -- Ignore unavailable to you. Want to Upgrade?

To: Will Cunningham who wrote (7015)	12/11/1997 3:59:00 PM
From: prakash	Read Replies (1) \| Respond to of 13925

ML's 12/10 report on CREAF's Ensoniq acquisation: 12 Month Price Objective: $30 Estimates (Jun) 1997A 1998E 1999E Net Income (mn): 167.0 237.1 247.4 EPS: 1.84 2.50 2.59 P/E: 12.0x 8.8x 8.5x EPS Change (YoY): 35.9% 3.6% Consensus EPS: 2.51 2.77 (IBES: Dec 97) Cash Flow/Share: 3.24 3.18 3.44 Price/Cash Flow: 6.8x 6.9x 6.4x Gross Dividend: Nil Nil Nil Gross Yield: Nil Nil Nil Opinion & Financial Data Investment Opinion: C-1-2-9 Mkt. Value / Shares Outstanding (mn): $2,090 / 95 Book Value/Share (Sep-97): $6.54 Price/Book Ratio: 3.4x ROE 1998E Average: 40.8% Net Debt/Net Equity: nm Est. 5 Year EPS Growth: 15.0% 1998E P/E Rel. to Home Mkt: 0.7x Stock Data 52-Week Range: $29 3/8-$8 5/8 Symbol / Exchange: CREAF / OTC Bloomberg / Reuters: CREAF / CREA Brokers Covering (IBES): 4 Exchange Rate: USD1.0000/USD Free Float: 40% Average Daily Turnover (th): NA *Intermediate term opinion last changed on 03-Apr-97. For full investment opinion definitions, see footnotes. Investment Highlights: £ Acquisition of Ensoniq broadens Creative's footprint over professional music & PC audio £ Market share gains from acquisitions should be clearly evident by mid-98 £ Management expressed confidence in meeting earnings estimates for the Dec qtr and FY98 Fundamental Highlights: £ Ensoniq sales were US$44m for the 9mths to Oct. At US$77m, the acquisition price is under 1.3x sales. In return, Ensoniq opens up a new OEM channel for audio chipsets with established customers like Hewlett Packard, Gateway, Micron, Apple etc. £ With the acquisition of Netmedia (Opti), Cambridge Soundworks (HIFI) and Ensoniq, Creative has spent US$130m on a group with combined revenue of over US$120m. Combined profits currently are minimal relative to Creative's core profit base. We expect over US$50m in-process R&D write-off in FY98 £ Netmedia (Opti) opens up notebook audio chipset market, HIFI opens up speakers and Ensoniq, OEM PCI-audio chipset.