What we ought to see now is some BOLD buyback of stock, like a couple hundred million dollars of it.
But "bold" is not a word I associate with Bruno or KLIC management in general.
They are good at running a profitable company, the only problem is they take the profits for themselves instead of letting the shareholders have most of the profits.
The analogy of Western Digital to Kulicke is also a good one from the standpoint that it's a company that makes tech products that are considered "old hat", and yet they are still extremely important in the technology world.
Yahoo shows the analyst consensus of 10-11% revenue growth in 2016. That sounds like growth to me.
This stock is INCREDIBLY CHEAP.
Reminds me a little of Western Digital during the huge slump because of the floods that disrupted magnetic disk production in Thailand. The stock roughly tripled within a year or so.
SONS just seems too incredibly cheap at this point. Enterprise value to gross annual profits ratio is only a little above 1. That is the sort of valuation you saw on tech stocks in Summer of 2002, after which the ones I bought rose 600% over the next couple years. This goes in the "deep value bin" along with other dirt cheap stocks such as ESIO, EXFO, and KLIC.
Couple years ago, a tough critic here was saying the problem with VECO is that LED makers have acquired a big overcapacity of MOCVD machines and thus the demand for more machines would be small for some time to come.
Wonder where we are in this process today? Has that cycle played out and is there now perhaps a prospect of some good sales going forward?
I guess I'll listen to their last conf call to try to get more perspective.
The growth is the iffy part. There is a widespread view that wirebonding is a technology of the past. Thermosonic bonding of bumps may be a good future revenue source, but the question is how well is Kulicke positioned for advanced packaging. Will they be the dominant vendor for electrical interconnect in advanced packaging like they were in the current generation? Or will they be a niche player?
In the meantime, in my view wirebonding is a log way from dead. And Kulicke is a cash cow with a dirt cheap stock in that business, and that makes them a deep value stock, whether or not they are a growth stock.
I see this as an incredible buy as a value stock. If they can achieve growth as well, then the upside is even higher.
It is a good growth stock though. I believe I have documented on a previous post while I believe this stock should reach double digits within 2-3 years.
Semiconductor related stocks seem to be getting hit a lot less hard than the Nasdaq as a whole in the last few days. That's probably because the semis were already hit hard the last few months, so they''ve already had their downturn.
One I think might be a "next INFN" is ACLS. They have struggled as a distant second place vendor in the market for ion implanters, a piece of critical equipment for semiconductor fabrication. They have a new product line called Purion which appears to be superior to their competitor's offering, and is making good inroads. It has the potential to greatly expand their market share, especially since they now have a product family spanning the whole range of implanter products, so that they have a much larger SAM than when their market share was primarily based on their strong position in high energy implanters. My goal is for them to see double digits from their current stock price in the low 3 dollar range. I think that may occur within 2-3 years.
INFN is a company with awesome technology, but you always have to factor stock price into judging an investment, and in my opinion, the fact that this company is so good is reflected in the rise in its stock price from 8 dollars to the 20s, and I think most of this company's upside has already shown up in the stock price.
Dumb management I don't think has much of a bearing. They are in a product upgrade cycle. Their revenue base has been older generation products. I don't care how smart managers are, if they don't have a strong product offering their business is not going to thrive.
But now they have Purion. A lot of circumstantial evidence suggests that this is the superior ion implant product line on the market.
So now the business is starting to take off. Even if management is dumb, which I doubt, even a dumb management can show good business performance when their company has the superior product on the market.
And even if mgt were dumb in some ways, they certainly aren't dumb when it comes to product development.
Furthermore, I find it extremely impressive that a small company in the highly cyclical business of semiconductor fab equipment could stay afloat during a product upgrade cycle in which their ENTIRE product line became "legacy" and has been replaced by a brand new product line.
Yes, that is big. 278 mil isn't a big hit to the company's balance sheet. 1.54 bil would have been. It seems to me Marvell is a lot more reasonable candidate as a possible investment in light of this development.