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Technology Stocks : MEMC INT'L. (WFR -NYSE) The Sleeping Giant? -- Ignore unavailable to you. Want to Upgrade?

To: Timothy W Adams who wrote (3514)	6/12/1998 9:46:00 PM
From: Zeev Hed	Read Replies (3) \| Respond to of 4697

Timothy, that is one thing I would not worry about. First they have a line of credit of about $900 MM of which they are using about $700 MM, so they have an additional $200 MM there. Furthermore, you should not forget that WFR is a very capital intensive company and they have just gone through a period of massive build up. When they say they will lose $30 MM they are still $8 MM positive cash flow, since they are charging quarterly to earning about $38 MM in depreciation. This company with about 40 MM shares has $1.2 Billion in equipment and "building" (after having depreciated about $500 MM in the last few years). Cash tightness would require three sequential years of losses in the $150 MM per year range. I do not think that is in the card. As I have explained in a prior post, both the special charges for downsizing (this quarter about $17 MM) and the charges for currency losses (Last quarter about $8 MM) will not be there in future quarters. We are talking about a company with more than $20 dollar sales per share and with $30 of equipment behind every share operating in broad market and supplying a commodity which demand is destined to grow. No bankruptcy there. My only worry is that we may not get $100 because before that someone is going to steal it at $15 to $20 share. By the way, once the savings from the reduction of 600 people hit the bottom line (I would say at least $15 MM/quarter if not $25 MM) join the elimination of the $25 MM in special charges, we might have quarterly swings of more than $1.25/share in earning WITHOUT improvement in sales and pricing. Zeev