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НТЕ Message Board

  • doublebarrel22 doublebarrel22 Apr 29, 2013 2:17 PM Flag

    I'm still scraatching my head

    I can't figure a good reason to hold this stock. The land? They were in bed with Apple and got kicked out. They have no business and knew it. They played us for fools. I can't see myself falling for it again on this land deal.

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    • Scratch your head all you want. Apple is not what it used to be. Time to look for other pastures and that'sexactly what NTE is doing. If you have doubts, exit.

    • I share your pain, but It sounds like they jumped out of bed more than were kicked out.

      The reasons to hold are: 1) The negotiation is ongoing and it is likely that some value will be salvaged. The "third party" Koo mentioned was in the picture when Apple selected NTE just a year ago. It's resaonable to think they are using this third party to squeeze NTE as much as possible. By announcing a willingness to walk away completely, NTE is clearly letting the customer know they've squeezed too much. Now it's up to the customer to decide to compromise or take on the risk of ramping up a brand new supplier in time for the next release.

      2) Yes, the land! If they self fund the development, which it sounds like they are planning to do, once stabilized the phase one 700k SF asset will be worth somewhere between $500 psf and $800 psf ($350m and $560m) with no leverage on it.

      I'm not going to buy here without more information on the land and the contract negotiations, but IMO there is plenty of reason to hold.

      • 1 Reply to smkros
      • Cost to build the property is $170 million. They have more than that cash sitting in the bank. Then it generates over $40 million per year which is almost all profit. And that is for 25% of the land at that one property. They can do that 4 times. This land value is massive. And don;t forget property appreciation over time.

        Remember that they have revenues and profits from other product lines. LCD just came into play 9 months ago. Also they are very good at always making money. What you see today is a demonstation of that. They won't risk taking large contracts if their is a chance that they won't make a good profit margin. Always has been like that.

        LCD production lines with brand new equiptment are there with a proven quality supplier. Someone will be using them at some point. I don't think they will sit there idle for long. Stock will base, if resoluton is made with LCM, spike, new touck/backlight business, bump up, land value will drag it up over time. Lot's or reasons to look at buying at some point. Hard to pick a bottom, but you can't overlook the property value. That is also one reason why Koo is kicking Apple out of bed. He has another hotter wife to spend his money on.

        Sentiment: Hold