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Vimicro International Corp. Message Board

  • crypinvestor crypinvestor Mar 11, 2008 9:23 PM Flag

    VIMC - cheapest stock ever

    VIMC is trading at less than cash and is still profitable. In the conference from 02/20/2008, Vimicro mentioned that they have $120 mill in cash, and expect a pick up in sales and profitablity later this year. Even right now they are at breakeven to slightly profitable.

    VIMC's market cap is currently less than cash and stock up while you can - this will easily double or triple this year.

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    • I don't if I would say smart vs. educated/experienced. The tuition for that education was pretty expensive. lol

    • Vacation here is still the smartest person on this board. I remember shorting this company in the 5's and listening to people talk about how the return to 8 was eminent. FYI I covered in the low 3's. Regardless, I won't go long until I some real improvement from the company. That may mean that I get in well over $5's, but it will be a smarter trigger point than today.

    • General market broke out to the upside. I have no clue as to whether this will positively impact VIMC or not.

    • If you are going to use the extreme numbers for comparison, the dow is down about 1800 points in the last six months or so. And it is still in the downward trend channel.

    • Should have clarified guidance as future guidance. They should already have an idea of q2 business.

    • Addendum to other post.

      No usually, a company only delays disappointing, not good news. It can happen, but I wouldn't invest on the hope that this is the exception to the rule. When VIMC's business picks up again, they will probably return to issuing guidance. Until I see guidance provided, I will assume things have not improved.


      Vacation

    • The valuation on VIMC is unheard of. It is still a cash positive shop, and should quickly double from here.

      There are not many times opportunities like this present themselves.

    • "VIMC is trading at less than cash and is still profitable. In the conference from 02/20/2008, Vimicro mentioned that they have $120 mill in cash, and expect a pick up in sales and profitablity later this year. Even right now they are at breakeven to slightly profitable."

      It is hard to believe much of anything said by the current management. The fact that they stopped offering guidance should tell you a lot more than "expect a pick up in sales and profitablity later this year." I remember when the Olympics was supposed to be a big boost to VIMC. Any Olympics sales should have already occured.

      VIMC is not even in the top 1 million of cheapest stocks ever. I remember a stock during the tech wreck that had 1 asset cash and the cash equaled about .50/share. The company was down to 2 employees. What did the stock drop to? .07/share. I believe there were numerous tech stocks that traded below cash in the tech wreck.

      If you are basing your analysis on sales price only, obviously penny stocks are cheaper. More likely, you are using value as your definition of cheap. Dropping 70% from the IPO price does not make a stock cheap on a valuation basis, just cheaper than before.

      My personal opinion is that we are in a secular bear market. Given that philosophy, what value do I place on a company that has consistently disappointed the market? None. For me VIMC is a stock to keep an eye on for a possible turnaround.

      I have seen the same arguments for buying VIMC at $6, $5, $4, $3.50. That the stock cannot go any lower. Yes it can. Will it go lower? I have no clue.

      My concern is will it go higher and when. I don't believe that happens until management has proven that they can execute and compete. So far, the only execution I have seen by them was timing the IPO. And the competition appears to be beating them.

      I wish you well with your investment in VIMC, but don't mislead other investors.

      • 2 Replies to vacation_here_i_come
      • Vacation, I think your example does not apply here. VIMC is totally different. I'm going to add more VIMC depends on the market situation, maybe around $2~2.5. I think one possible outcome is the CEO teams up with a large shareholder to buy the company private. In this case the premium should be 40~80%.

        It's a wild guess. But after seeing EEEE, TOM and several others, this one why not?

      • Honestly I have not put the amount of research into this company yet for me to invest in it yet. I also have a slight apprehension for chinese stocks. Without feeling like know at all what future cash flows will look like I guess I am in no position to say if the stock is cheap.

        Still a negative enterprise value (market cap - cash or +cash. This means that the company is essentially priced for failure. This aspect fits the Ben Graham model perfectly. I remember the tech wreck and I don't know of one single company that traded for less than they had in cash and actually had a business. This rarely happens in a mature market like the US. Still you are correct that the earnings power of the company must be contemplated because I have never seen a company say "well we don't think our business works any more so we are going to dissolve and pay our shareholders out cash" . What they actually do is milk the cash for years of unprofitability. There is a company BSET that has not made on dime on furniture in years, the losses from furniture are more than made up by gains the company makes investing its cash position.

        Tam

    • I don't think ever, but it certainly looks cheap to me.

      Tam

 
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