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Technology Stocks : Varian Semiconductor Equipment Associates -- VSEA -- Ignore unavailable to you. Want to Upgrade?

To: spiny norman who wrote (1)	3/16/1999 9:37:00 AM
From: Duker	Read Replies (1) \| Respond to of 1929

I have got to have a long conversation with a guy who is much more up to date on the health care piece ... it is truly up in the air what people will be willing to pay for this piece? I am still in the process of trying to determine if and when this thing will trade "when issued." Typically, the market is most inefficient when this happens ... people start blowing out the piece that they do not understand in what is typically a very thin market. I am going to call over to the IR person today to get the scoop on it. Its record date (I think) is the 24th (so it may be when issued sometime thereafter until the payable date which is April 2nd ... I am not ever sure what the mechanics of these things are ... but, I will check into it). As far as the "sum of the parts" versus the "vulture" strategies ... The guy who has done the work on the other two businesses believes that the Semi piece could be worth nothing and it [i.e., VAR] was still a great buy anywhere in the low thirties. This gives me some hope that even bright people with big stakes in VAR will be willing to jettison the Ion Implant business ... so, I would want to get greedy and play the role of the vulture on this one. You are going to have about 30mm shares outstanding. $100mm in C&E and no debt (small payable). The operating model is not very different from most of the SemiCaps. The gross margin in 1997 on a big slip in revenues was 43% ... but that was sweetened by about $30mm of royalty income from their relationship with TEL. That numbers was less than $10mm in 1998 and will be still lower this year. But, as business picks up, you can expect a 40%+ Gross Margin and probably 20%'s in the OPM department ... with upside depending on the strength in the recovery ... The company will have about $3.33 in cash and $6.35 in book when it comes out of the womb. I have no idea where the valuation is going to be ... but I would be willing to pay a multiple of those two numbers <g> ... though I would rather pay $3.34! I appreciate your interest and your suggestion on GGNS. [OT ... got the CFMT 10Q yesterday ... will go through it this morning ...] -- Duker