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ChipMOS TECHNOLOGIES (Bermuda) LTD. Message Board

  • misterbob8 misterbob8 Jun 12, 2012 2:43 PM Flag

    Be careful what you wish for

    OK, all of this is opinion ...

    I'm happy with the job management is doing. They're taking a long-term view of what's in the best interest of shareholders, not a short-term view. We complain that American companies manage from one quarter to the next, but now we're complaining the IMOS management is NOT doing that. Instead, they're building a financially sound company over a period of years. If it takes an extra year or two, that's not an issue to them.

    Here are just a few of the long-term steps they've taken. They managed cash carefully when they had to, including restructuring debt. So when a building became available right across the street from current facilities, it was a drop in the bucket to pony up $10M to buy it at auction at a very attractive price.

    It may be hard to believe, but they have significantly simplified the corporate structure. It wouldn't surprise me if they continue that process.

    They have shifted the emphasis of the business to higher-margin products, and have diversified the customer base.

    They have moved the company from the brink of bankruptcy to becoming a cash cow. Net debt will be erased this year, and we all know by now that it came down from being over $500M.

    They even took a shareholder-friendly step of implementing a reverse split when it became necessary to boost the share price.

    Maybe they're just not very good at managing the share price in the short-term. Or maybe they just don't care. Their approach is to build for the long term and let the short term take care of itself. It can be frustratingly slow, but it still might be the right way to go.

    Good luck to the longs.

    Bob

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    • Did you ever read the comic book Groo. Awesome stuff! Want humor, read that. He was called a dolt once per issue.
      To the previous post, I realize management can do a $10 mil buyback in 1 month. I simply don't think they will. I think they want to make it last at least a couple of quarters, unless stock stays this low and they use it faster.
      If I said I think they do a $20 mil buyback, I take that back. It is possible, but $10 mil is more likely with a sliding scale on number of shares purchased based on price. I think there will be no ceiling so they can send messages that they believe shares are undervalued and that they are buying every day.
      Just my opinion, but I think management has been pounded with this message, so I do think it's realistic.

    • Relax memory,trying to inject a little humer into a very frustrating situation.We disagree on 2 points though.I do not see them buying back over $ 15.00 or spending 20 million on buyback.Just my opinion and hope I am wrong.
      P.S. Been called a Lot of thing's in my life but that's my first " dolt".Definetly gave me a chuckle.Cheers.

    • Memory,
      We don`t know the particulars so it isn`t clear how much they would buy and at what price. If they are determined to buy 50K shares a day, for example, then the program would conclude quicker as the price rises. If they have a set dollar amount per day (e.g. $500K, where they buy less shares as the price rise), it would still get done in about a month, if we are talking about a $10mm program. I'm not sure why you think it would have to take several quarters. That`s why this share buyback is so dissapointing. If they had their ducks lined up they would be finished with the current $10mm program and be working on the next one.

    • No, I'm not thinking about all $42 million you dolt. I'm thinking $20+ mil over the next 12 months between buyback and div, I'd prefer all buyback. Yes, if stock stays at this price, then it gets done in a quarter, but if it moves up, ie $15 or $17 or $20 or higher, they buy less (but still buy) and it takes perhaps 4-6 quarters to fully utilize. Much more accretive to buy at lower prices, right?

    • JW, I agree the boys are probably getting tired of receiving our emails. SJ probably says something equivalent to our "Geez Louise" in Taiwanese every time that happens. Almost everyone here seems to think something is coming soon and maybe it is. Sounds rational. Even I considered they might make one grand announcement about the buyback/dividend (didn't Caff say the annual meeting is coming up?). But given their history I'm not going to get my hopes up. I guess we'll see soon enough.

    • Ach so! Well, could still be done in less than two quarters...at least in MY dreams.

    • Drunk again ! Memory was thinking of them spending all 42 million on a buyback. Wishful thinking ! Cheers

    • Memory,

      Why would it take 3-4 quarters to complete a buyback at $10? 40K shares a day (currently below the 4-week daily avg. x 25%) would take 25 trading days to finish for $10mm, for example. That's being consverative if volume trends pick up too. If the stock moves up to $15 (likely) a steady 40K a day up could complete a $10mm buyback in about a month.

    • Jarret;
      You are so right.However, there are several options for that money and I do not believe a divvy is one.I do believe something is in the works but that does not mean you ignore your shareholders. One .10 cent divvy solves All problems as I would personally buy another 50,000 shares.GIVE ME A REASON TO BELIEVE ! I believe some know more then others about what is truly going on.Not being privy to more info I go on " Once shame on you ( buyback), twice shame on me.As Bob would say " Good luck to the long's "

    • Jaret,

      Agree with you. They could do $0.10 per share dividend and that would be roughly $12 million per year. They are allowed to dividend from ChipMOS Taiwan to ChipMOS Bermuda IF ChipMOS Taiwan is profitable, which has not been the case but should be this year...ought to earn $40-$50 million. So they could comfortably pay $12 million over next 12 months, and do a $10 or even $20 million buyback, with no ceiling, but where few shares are purchased if stock goes up a lot (we should have such problems). In any case, it could be a buyback that perhaps takes 3 or 4 quarters to complete if stock is at $10, but takes 2 years or more if stock is at $20. Anyhow, $42 million not a ton, but more than enough to do something material.

      I believe management is responding to at least some shareholders. I'd be shocked by a merger announcement. I'd be equally shocked if they do not announce revised buyback plan - likely prior to the next conference call.

      Stay the course...trading at 2.5x trailing FCF is an opportunity we're all unlikely to find anywhere else any time soon.

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