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Cypress Semiconductor Corporation Message Board

  • DanteAlighieri DanteAlighieri Feb 27, 2006 5:26 PM Flag

    Valuation discussion

    I have been reading some of the valuation posts from floppy, simon st al: great insights and very useful posts.

    I have been trying to do a bit more of an in depth analysis, but the figures are hard to come by and the SPWR growth would skew the numbers in any evaluation on a yoy basis.

    However, SPWR contributed $29.3 million in revs and .01 in EPS to CY in the mrq, leaving the non SPWR business lines with ~209 million in revs. Cy ended the Q with 209 million in cash ($1.54 per share) and now has ~50 million of NETL stock as well.

    At today's closing price of $43.30, each CY share represents $16.67 worth of SPWR stock (52 million SPWR shares * 43.3 / 135 million).

    Hypothetically, if CY were to pay a dividend by disbursing all the SPWR shares and 1.09 in cash to CY shareholders, we would basically be getting the current quote of $17.76 in SPWR and cash, thus owning the rest of the CY businesses for free.

    What would be left? A company with $60.75 million in cash, $50 million of NETL stock, 800 million+ in revenues and, unfortunately, $605 million in debt. The bright side though, is that it would all be free, so you can't complain too much about the debt.

    The problem remains about how to valus teh rest of the company: CY minus SPWR. If you use a simple P/S of 1 and subtract the debt minus cash, you're left with ~$260 million, but the market never valued CY that low in the pre solar days, so I don't think trest of the company as a whole could be worth less than the 2003 low of $5.

    Also, looking at all the research reports (S&P, Sabrient, Reuters), these are all ganeric input the numbers/ spit out the numbers models that don't take into account 'behind the numbers' fundamentals.

    If anyone can come up with a fair way to value CY excluding SPWR, I would be interested to see it.

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    • SPWR will fal and fall hard, do you think CY can actually get the market price for SPWR. Wake-up!!!
      If you are basing your decision to buy, sell, or hold CY soley on SPWR then you really should be very careful.
      Yes, I am short and mark this post as CY will not hit 18 again this year or next year!!!

      • 2 Replies to buyteks
      • Lots of people hate shorts. I am not one of those. It is the flip side of the same game.

        However, it looks like you may have picked up a bad report, threw a dart at the 52 week high list or some other equally useless method to decide CY was a good short.

        I can tell because your posts basically consist of 'It's over valued', 'it's gonna fall'. Anyone can say anything, but it don't make it so. If you are a trader, you will take your loss soon and move on. If you have no discipline you will hold on until you can't take the pain any more.

        If CY can get market for SPWR is irrelevant. The question is what are YOU getting when you buy 1 share of CY, and what will that share be worth down the road.

        Obviously anyone who only wants SPWR will go buy SPWR. I don't think anyone is in CY solely for SPWR, but that is a piece that has to be taken into account when you try to stick a value on this stock.

        I won't mark your post: useless effort since CY will hit 18 in the opening hour. It will likely trade down from there, but 18 will be hit. If you set a stop on your short at 18, I would move it to 18.25 and close out my position if it's in the mid 17's in the final half hour of trading tomorrow.

        CY is halfway through a 4 point move from 16 to 20, where it will stand by the end of March.

      • You should carefully review Simon's summary post for 1st Albany's SPWR CC. This is an unique solar firm above any peers.

        How about tomorrow you short at market open and I buy in at market open?

    • There is no reason to do that Cy has no plans on getting rid of Sunpower.

6.55+0.16(+2.50%)Feb 12 4:00 PMEST