Dow- Corning has not been factored in by most. The beast-implant fiasco did not turn up any immune type diseases, and the company has a huge line of adhesives, coatings optical and silicone-electronic products. This part of the company should be valued like MMM.
Eventually DC will come out of Chapter 11. Coupled with the current GLW product line this will be a next generation, first-tier growth company. This stock will hit $15 in the 1st quarter of 2004, if the recovery continues, terrorist are minimized (can never be completly stopped) and Iraq starts to look better.
GLW went to about $100 in the bubble and down near $1 in the collapse. My guess is that it will return to $50 about 6 months after DC becomes public again.
Stocks don't go straight up, but back and fill over time. Average in.
I tend to agree with most of your post, specifically including the projection of $15 during 1st quarter of 04 (although I would expect it late in the quarter).
I don�t, however, see your basis for saying �Dow- Corning has not been factored in by most.� My sense is that it has been factored in at its current level of contribution of earnings (which have been reported by Corning for two quarters now). I do believe DC will provide greater contribution to Corning�s market capitalization as it demonstrates its ability to provide profitable growth.
I also don�t understand what you mean by: �after DC becomes public again.�
I admit that I don't understand the implications of DC being in Chapter 11. I thought that DC was considered a separate enity from GLW in the sense that the "calls" were being made by the bankruptcy courts.
DC is a fully owned subsidiary of Dow and Corning. But in bankruptcy can 1/2 of these earnings fall to GLW's bottom line or assets be proportionally included? (Could they ever?) "Public" was a bad word to use-I meant coming out of Chapter 11.
I don't know how GLW accounts for DC earnings either in Chapter 11 or out when that day comes. Perhaps you can enlighten me about this, and the recent earnings of DC that have been included.
Re to:lws " My guess is that it will return to $50 about 6 months after DC becomes public again."
DowCorning is priced in. Anyone with sense enough to trade must know that.
If GLW gets it's debt back in line, no small task, and returns to profit level of Jan 1997, (when they were about this size and after spin off of quest and covance) then a fair value would be $13-14 based on their price history.
Most people, even some so-called informed brokers, think of GLW as a fiber-optics company (check out for yourself), LCD, diesel enhancing company. DC is still associated by most with breast implants, and most do not know that they are profitable or the scope of their product line. It has been stated that they can operate very well as a private enity in chap.11, so they are in no hurry to come out.
I agree that DC should be factored in, but it is not by most. The time horizon (for leaving chap. 11) is certainly too long for many and may be a 2 year consideration.