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Xyratex Ltd. Şti. Message Board

  • upmann59 upmann59 Oct 9, 2010 11:57 AM Flag

    Dear Mr. CEO of XRTX

    Dear Sir,

    I am sending you this letter as a concerned shareholder of XRTX. Your company is performing admirably, however the market does not value the results that your team is providing. More specifically, you have almost $3.00 per share in cash, a trailing earnings over $4.00 per share and revenue generation of over $1.5 billion. Accordingly, if the market does not value these specifics, I believe you should take advantage of the situation and take the company private yourself. If you paid the current shareholders $24.00 per share you could acquire the entire company. If you deduct the current cash in your company and tighten up your inventory the net purchase price becomes $19.00 per share. Based upon your current earnings, the purchase price could be repaid in under 5 years. I have no doubt that you could obtain bank or venture financing for the $750 million purchase price. That price is less than half of your current revenue. I know this is aggressive for you as an individual but as the CEO, it can be done for you and your family.

    I wish you the best in this regard and while I appreciate the value in your company, the market does not.

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    • Looks like you may be right STX going private at $16. This should go to $17 today and $20 next week.

    • Let me make it clear. I am long on this stock and I wish they got buyout like 3par and data domain (but they are totally different types of company).
      I believe the low stock price is caused by the future of XRTX business. Analysts expected that XRTX business will peak at 2010 and 2011 (around $4 on each year), but it will go down to $2 per year. Therefore, XRTX management has to convince analysts their EPS will stay above $2 beyond 2011, but it is impossible (need to have extreme confidence) to make a statement like that.
      I suggested XRTX management to hire consultant (Goldman or Morgan) to evaluate their market value. Most of the time it will make boost up the stock price close to their true value. On the other hand, it can get analysts or big company attention to get buyout.

      It is my 2 cents.