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ChipMOS TECHNOLOGIES (Bermuda) LTD. Message Board

jaretwilson 10 posts  |  Last Activity: May 22, 2016 5:47 AM Member since: Oct 18, 2006
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  • jaretwilson jaretwilson May 22, 2016 5:47 AM Flag

    "What makes you think the warrants/notes/options won't eventually be converted and have a dilutive effect on the share price?" - Of course most or all of them will be converted -- that's the whole point. The dilution happens when they are issued (if they are in the money), not converted, because it is assumed that they will be converted if they are in the money, and that is why an investor uses the "fully diluted" share count as the number of shares, and not the number of ordinary shares. I would recommend getting a book on investing for these basic concepts.

  • jaretwilson jaretwilson May 21, 2016 8:30 PM Flag

    livininisrael, I'll use Q4 2014 as an example. You said it was 66.471 million shares.

    From the Q4 2014 earnings release: "Weighted average number of ordinary shares used to calculate the above diluted earnings per share includes only securities that have a Dilutive Effect, as such term is defined by GAAP requirements. However, fully diluted share count as of February 15, 2015 includes, in addition to the 65 million ordinary shares as of the same date, 4 million shares underlying capital notes, 14 million possible shares underlying notes series F (unless repayable with cash), 15 million possible shares underlying options and warrants and 6 million possible shares underlying Jazz notes due December 2018 (unless repayable with cash). The company had 65 million ordinary shares as stated above as of February 15, 2015, as compared with 58 million as of December 31, 2014, with the increase primarily attributed to bonds series F conversion to 7 million shares occurred in the market during this period."

    So, it was approximately 65 + 4 + 14 + 15 + 6 = 104 million. Today, it's about 107 million after 3.3 million shares used to purchase the San Antonio fab (although perhaps 2 million of those 107 million are out of the money). Dilution from end of 2014 to mid 2016 = 3.3 million shares.

    You've been posting over and over for years about the "constant dilution." In recent years it has been conversion, not dilution, as has been said many times. In fact it's stated right there in the last sentence, "with the increase primarily attributed to bonds series F conversion to 7 million shares occurred in the market during this period." An ordinary share, a warrant, an option, a convertible bond, they are all potential shares when considering the fully diluted share count. You have only been counting ordinary shares.

  • jaretwilson jaretwilson May 19, 2016 12:46 PM Flag

    livininisrael, are you intentionally misunderstanding things? The fully diluted share count is around 105 million, or up to 107 million including out of the money options. What you are indicating with the numbers above is not further dilution, but conversion of bonds and options that already existed and were already in the money. This is clearly shown by the fully diluted share count. For an example, here is a passage from the Q4 2015 press release:

    "Fully diluted share count is comprised as follows: 86 million outstanding shares as of the date of this release, 12 million possible shares underlying options and warrants, 3 million underlying capital notes and 6 million underlying convertible bonds (unless repayable with cash), totaling to 107 million."

    Conversion and dilution are two very different things. The last significant actual dilution Tower did was 3.3 million shares to buy the Maxim fab. However, the numbers you used above are not dilution.

    You should read about fundamental concepts like this before investing further.

  • Reply to

    Monday cc

    by scbest May 6, 2016 1:45 PM
    jaretwilson jaretwilson May 9, 2016 8:45 AM Flag

    There's no point in asking that. You already know that the answer is because the gross margin figure you mentioned excludes depreciation, it's not the GAAP figure.

  • Reply to

    Volume in Israel on 4/20

    by squeezethewheeze2001 Apr 20, 2016 10:57 AM
    jaretwilson jaretwilson Apr 22, 2016 1:02 AM Flag

    Price to sales is a meaningless ratio since it doesn't say anything about your operating margin. For most companies earnings and free cash flow are much better indicators. When you own a company, you aren't looking for really high sales, you are looking for them to throw off a lot of cash. When Tower starts to produce more cash than it consumes, the market will take notice.

  • Reply to

    Jaret Wilson

    by livininisrael Apr 10, 2016 6:01 AM
    jaretwilson jaretwilson Apr 11, 2016 10:34 PM Flag

    R&D is only about $15 million per quarter, or 6% of revenue (and falling as revenue rises), which I don't consider to be an extravagant amount for a foundry company serving so many different industries.

  • Reply to

    Jaret Wilson

    by livininisrael Apr 10, 2016 6:01 AM
    jaretwilson jaretwilson Apr 10, 2016 5:29 PM Flag

    It should be readable by anyone, the Pro restriction was only for a day, although it will go back under Pro 30 days after it was published. On SA search for TSEM and it should be the first article under the Latest category: Modeling TowerJazz's High Free Cash Flow -- if you can't view that let me know. I think you can also find it on Google by searching for that title.

    Sentiment: Strong Buy

  • Reply to

    March Revenue

    by jamcracker25 Apr 5, 2016 1:51 PM
    jaretwilson jaretwilson Apr 8, 2016 11:59 AM Flag

    buybuybuy - there are definitely other courses of action.

  • Reply to

    March Revenue

    by jamcracker25 Apr 5, 2016 1:51 PM
    jaretwilson jaretwilson Apr 8, 2016 1:41 AM Flag

    I'm very disturbed, but still reading the board. It's very unfortunate that SJ and SK have driven us to this conversation. The question is what course of action to take next.

  • Reply to

    If Yahoo is correct

    by scbest Feb 29, 2016 12:27 AM
    jaretwilson jaretwilson Feb 29, 2016 8:16 PM Flag

    mathemagic sounds like the author of that poorly written Seeking Alpha article.

    mathemagic claims that the share count is "skyrocketing" but almost all of the dilution was from troubles a number of years ago and not from any recent action. Yes, convertible notes were converted into shares, but going by the fully diluted share count, that doesn't change anything. The Panasonic deal only caused about 1% dilution, and the Maxim deal only caused about 3% dilution. Far more value was created from those deals than 1% and 3%, so shareholders still ended up way ahead from the deals.

    As for there being a "cash burn", the company had already announced that it was expanding production to satisfy demand for the RF market. There are only two companies that serve that market, TSEM and GlobalFoundries, and TSEM is stealing market share, and it's a growing market, so it's not a surprise that they would have too little production to meet demand. I would call that investing in a growing business rather than a "cash burn"

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