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ChipMOS TECHNOLOGIES (Bermuda) LTD. Message Board

  • memoryxpert memoryxpert Aug 15, 2012 4:42 PM Flag

    What IMOS needs to do...eventually

    If IMOS grows 5-10% a year, spends $90-$100mm on cap-ex, and has $100mm+ of Free Cash Flow, in the LONG TERM (ie when they are Taiwan listed and Free Cash is actually available...this could be only 12 months from now) they should adopt a policy like the one Cisco adopted this afternoon.

    "Cisco has the financial strength and flexibility to effectively invest in our business, pursue strategic opportunities, such as acquisitions, as well as return a minimum of 50% of our free cash flow annually through dividends and share repurchases to our shareholders"

    Assuming dividends of ~$50mm a year and no buyback, this would be almost a $2 per share a 5% yield, IMOS is a $40 stock. That said, while the stock is in teens or low 20s, buyback is preferable.

    Come on IMOS, you can do it.

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    • Memory and Jaret , what we need to achieve from this CC is three major issues. I am not including real GAAP earnings and positive forward guidance because I believe that is a given.
      #1 announce a dividend that will be paid out in 2012.
      #2 announce an aggressive buyback without price limits and more then $10million that could start immediately after CC.
      #3 the final roadmap to a one company entity that trades on both the Taiwan and Nazdaq exchanges.
      If all of these issues get resolved,then the only thing left will be promoting the company to as many institutions as possible and the stock price will trade to true value north of $30 very quickly.

    • Studies have repeatedly shown that companies with high dividends give higher returns. The reason is when companies hold onto most or all of their cash rather than returning it to investors, they end up getting diminishing returns for it. Stupid takeovers, overly high salaries for executives, etc. If you walked around with $1000 in your wallet, you'd probably end up wasting a lot more than if you walked around with $20 in your wallet.

      Buybacks don't show a high return on average, but that's because many are done at a poor price. At anything near the current price it's obviously a good deal.

      I have a small position in an aircraft leasor. Consistent 5% dividend and each time the stock dips significantly they buy back about 5%, with the rest of cash flow going to prudent organic expansion. Not an exciting stock, but that's smart money management.

      • 2 Replies to jaretwilson
      • When you note that buybacks don't always have a good payoff, there are valid reasons to consider. Many buybacks are announced when performance is poor, to prop the stock price up. You wouldn't expect the outcome to appear to be strong in that case. Also, many buybacks are authorized but never carried out. (Not sure if that's included in your statistics about the results.) At any rate, none of the bad outcomes would be applicable to IMOS and I'm hoping management gets this buyback moving no later than Monday of next week.

        Good luck to the longs.


      • Jaret, I hear you and agree.
        For IMOS, currently a very exciting stock, bc it is silly cheap and completely under-owned.
        3 institutions...3 own more than 1 million shares. 1000s of big players that can get involved owning this. I always ask, with good news, who is the incremental buyer...well, in IMOS' case, there are tons, and I don't think the top 3 on this list are sellers.

        Eventually, when this is $30 or $40, it will be boring like the other company you own...and if the company has disciplined capital management (solid dividend, buyback on dips) then you will surely do well. But for now this is SOOOOOO crazy undervalued.

        Look who owns AMKR
        And that's just page 1. (FMR is Fidelity by the way).
        I see a LOT of potential buyers. Sellers...not so much. Folks, these guys deliver, will be GREAT.

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