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Technology Stocks : THREE FIVE SYSTEM (TFS) - up from here? -- Ignore unavailable to you. Want to Upgrade?

To: dfloydr who wrote (916)	2/3/1998 10:07:00 AM
From: Noblesse Oblige	Read Replies (2) \| Respond to of 3247

To the "thread," For those that suggested a share buyback to resolve this company's PR problems.... It has been tried already. TFS announced a share buyback when the stock was trading at the $ 8 - $ 9 level (I know, because I was accumulating it there, and the announcement made it impossible for me to buy more shares at that point!), and the stock immediately traded up into the $ 11's. Unfortunately, management only repurchased approximately 30,000 common there. Although I asked "Why?" at the annual meeting, the only thing that Buchanan would say was that the company didn't want to reduce the float. Obviously, that is internally inconsistent...what it didn't want to do was buy the stock back at that price. It certainly would have been easy to do if they were serious, as Chancellor was a sizeable seller about the same time that they were making the repurchases. In retrospect, I don't think they were really serious about it, and I doubt that any announcement about a share repurchase now (when they clearly need the money for expansion of their capital facilities) would have any impact at all. The "market" wouldn't take them seriously. They already have a track record in this area. What the "market" takes seriously is coverage by analysts that have a little "pull", or, as in the recent case of Intel, Microsoft, and Compaq...split announcements that point out the "confidence" that Directors have in the future of the company. To date, TFS hasn't done what is necessary to acquire the former, and hasn't implemented policies that would lead to the latter. Thus, the current view of the "market." If the management doesn't make this a high priority, institutional investors sit out the party. I have no doubt that the market will react to improving fundamentals. It has already done so. As sales and earnings get better, investors will acknowledge that. However, to get a premium valuation (which the underlying business justifies, in my view), the management has to do more than what has been done so far. In the end, management's are graded on two things: operating the business and maximizing the value of that business to the shareholders. It would indeed be unfortunate if the current group is successful in just a portion of its responsibilities. Have a good day everyone.