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

To: robert b furman who wrote (21135)	8/1/2018 12:45:16 PM
From: John Pitera	2 Recommendations Recommended By 3bar sixty2nds Read Replies (1) \| Respond to of 33421

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!* Mid 60% MARGINS!!!!!...... IMMEDIATELY ACCRETIVE........ that is like listening to Mozart's Jupiter symphony........ thats my idea of heaven.... where all the companies has Margins @ 65 % and roll ups that are immediately accretive..... ------------------------------------- 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. what's so powerful is the semi's used to have such a cyclical boom and bust cycle.... but with the huge influx of chips being placed in just about every devise........ the story has turned into one OF SECULAR GROWTH.... and not the boom and bust.... that we grew up with in the 1980's... and 1990's... there has just not been sufficient recognition of this. thanks for all the fabulous numbers...... and analysis........... Morgan Stanley and Blackstone can not write sell side investment research that is as concise, as cohesive and understandable........ they bring in all kinds of extraneous filler material.... as if they are getting paid by the # of pages they can generate.... or else they are frusted Authors..... looking to write Proustian length prose on par with "Recherchez les temps Perdu"........ LOL John but seriously, many many thanks for your superb insights and as you know there are no short cuts to gaining experience...by observing industries and markets for quite a substantial period of time. JP