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Technology Stocks : VLSI Technology - Waiting for good news from NASDAQ !!! -- Ignore unavailable to you. Want to Upgrade?

To: Linda Kaplan who wrote (6025)	3/29/1999 9:40:00 AM
From: otter	Read Replies (1) \| Respond to of 6565

I did a ton of reviewing this weekend. The purpose was to try to assess the likelihood of VLSI going (if at all) for a price greater than $20. Very selfish reasons, given the $20 July calls I have. In no small measure, I re-did what I've done before; and compared VLSI today with LSI today. The approach has some degree of validity because they have similar products the fortunes of each company as reflected in the price of each company's stock have TENDED to track each other. To make a long story short, if all things were as equal as they have been historically, one would expect that VLSI's stock price today would be roughly where it is - today. That is, roughly 2/3 that of VLSI. If one were looking to see VLSI's valuations equal to LSI's (they almost never have been), it would be a $30 stock. It isn't and won't be. Thus, based on HISTORY, only, VLSI is a $20 per share company at this specific point in time. Now, the question is whether or not the company deserves a higher evaluation. Here are the drivers I see. Note that NONE of them are subjective: ++ An improving worldwide market for VLSI's products. ++ Accelerating number of product announcements. ++ Cost control measures that are being implemented. ++ The 'cachet' that VLSI's products have. (whatever that might mean) ++ The potential for synergy that might exist between VLSI and an acquiring company. ?? Un-announced IP. Impossible to measure without being privy to confidential information. ?? PHG's LIKELY reaction to this weekend's announcement. ?? The amount of 'goodwill' that an acquiring company would be willing to fund. -- VLSI's dependence on ERICY's continued orders for 30% of the company's revenue. -- Big Al Stein. -- The fact that something other than a cash deal will be very hard to accomplish. I think that to a significant extent, the positives AND the negatives have all been at this time, factored in to the current price of VLSI stock. And, like others, I think this means that if PHG were to walk, it would take another announcement to materially sink the company's immediate stock price. It all boils down to the imponderables, doesn't it?