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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (21126)	8/1/2018 9:55:33 AM
From: robert b furman	2 Recommendations Recommended By 3bar sixty2nds Read Replies (2) \| Respond to of 33421

Hi John, Thank you for your kind words. So far this Bull has been very good to my account. Cohu has been a large paper gain. If they repeat their past performance - they'll be yet another double. Cohu announces their earnings tomorrow AH. This will be a very pivotal webcast. Up dates on the acquisition of Xcerra will be most interesting. I'm not sure that the street has given Cohu its due on accomplishing this merger. Cohu has bought a company that had greater revenue,greater cash,and higher margins - with very little product overlap (mems testing) comes to mind as the only overlap. Xcerra was an outsource maker of test equipment. They do not have a manufacturing facility other than to assemble the outsourced components. Xcerra bought the gravity feed business (Microtest) from Dover. Dover also sold Rasco to Cohu in December of 2008. Cohu took their pick and place technology and added parallel capabilities to the then #2 Rasco gravity feed test kandler line. In the next 5 years Rasco gained the # 1 market share as Xcerra used the microtest line for different test applications. The combination of the two will create a powerhouse in testing. This is the link to the investor presentation recapping the combined company: cohu.gcs-web.com The beauty of this combination is the consumable side of testing. Consumables represent 40 % plus of Cohu's business and Xcerra was bigger into consumables than Cohu. Their combined market share is estimated to now be 16% - the largest in the sector. This sector has mid 60% margins! When Jeffrey Jones states it will be immediately accretive - I listen up! 20 million is synergies over the next 24 months will add 50 cents just there. The combination will now equal revenue of over 800 million. Historically, every time a major merger has been accomplished amongst competing companies, a juggernaut of profitability has come out of the combination. Kla merged with Tencor - next years earnings are estimated to be 8.68 Amat buying Varian - next years earnings are estimated to be 4.57 Lrcx buying Novellus - next year earnings are estimated to be 18.88 Avgo next year earnings are estimated to be 20.57. The lesson to be learned is those who have merged and rolled up their competitors have economies of scale but more importantly - they have an installed owner base of equipment that runs 24/7/365. That provides a wonderful ownerbase that requires a lucrative service organization. A remarkably little understood aspect of an industry that has been a cyclical grower that has morphed into huge profitability. This now consolidates the test handling side of all chip making (including the wafer chip scale packaging sector often referred to as advanced packaging - 20 % of all chips). When the street realizes how powerful Cohu will be within the semi manufacturing business - it will be a double! Fortunately Cohu for the second time embraced taking on debt (first time was a small amount to buy Kita)and not diluting the stock with an all stock transaction. I can see Cohu's EPS reaching the $4.00 per share in 2020. Thank You for your kind words. Put selling and trusting in time decay has been a great model for profit building. I have recently been able to buy a large position in T. I actually had 5,000 shares exercised early from 52 September puts I had sold - got lucky as someone paniced when T hit a 5 YEAR LOW AT $30.13. This position has now given me a dividend income portfolio that finally has my dividend income finally surpassing Jand and my combined incomes when we both worked - let's hope it stayed that way. On July 27th (my 66th birthday) I rolled out of my CY position and bought into KMI. So my 11.37 cost average in CY was morphed into a 18.02 purchase of KMI with 36 cents cash staying in the account. That will bump my dividend income from CY's 44 cents to KMI's 80 cents this year. Now hoping the proposed dividend path into 2020 (1.00 in 2019 and 1.25 in 2020) stays on schedule. Garden is growing really well and I've still got the address to send you a Wisconsin care package to. Jan and I actually made our first batch of bread and butter pickles yesterday. Peppers are unusually good this summer and the tomatoes tower over my head. We did a lot of soil upgrades this spring - it looks very productive. On a side note Jan and I have been able to buy the one half of the Pine trees up north from my sister - so we have another place to hunt deer at. Bow season starts mid September and gets really good the first 2 weeks of November. Gun season is the weekend before and after Thanksgiving. I have two bows and two rifles and the invite stands! Thanks again for the encouraging words! Bob