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Gold/Mining/Energy : Derlan (T.DRL) -- Ignore unavailable to you. Want to Upgrade?

To: edward harris who wrote (100)	12/17/1998 7:45:00 PM
From: thomas gentry	Read Replies (3) \| Respond to of 319

Is Derlan oversold? I'm trying to figure out what makes Derlan tick. Here is what I know so far... 1. Outstanding shares: 28.4 million 2. September 30th book value: $61.3 million (Derlan lost $23 million last year) 3. December 17th capitalization ($1.17 per share): $33.2 million Today's $1.17 close puts Derlan's cap value at a $28 million discount to their book value. Now I've never been accused of being particularly generous when it comes to valuing money losing companies like Derlan, but am I alone in thinking that the market has been a tad aggressive in its destruction of DRL's share price? Now do not get me wrong on this. Derlan does not paint a pretty picture. These guys have a real problem on their hands. They have a semi-conductor business in their portfolio that bleeds nothing but cash. But consider this; their November 10 financials included news of an "accelerated divestment plan" to get them out of the semi-conductor money pit so that efforts can be focussed on their highly profitable aerospace and pump businesses. Yet today's $1.17 price suggests that the market feels that the plan will not just fail, it will make things worse. A plan so incompetent that it will increase Derlan's losses by 22%? Now THAT'S pessimism. About a month ago (when the stock was trading at a lofty $1.75 per share) I figured that Derlan's base value was about $1.35 a share. This was based on the company losing yet another $23 million in F99 to put the semi-conductor problem to bed. I figured that at the very worst, Derlan would have the "skill" to hold their F99 losses at F98 levels. Based on today's price it looks as if the general market has even less faith in Derlan's management than I do. Or do they? Did anyone happen to notice that Derlan traded an astounding 676,293 shares today? From where I sit, this sure looks to be a seriously oversold stock. My worst case scenario based on information available to me? A share value of $1.35, 15% higher than today's close. And remember, that's WORST case. Any comments on all this? Thomas