Technology Stocks : Silicon Motion Inc. (SIMO)
SIMO 53.77+0.7%1:54 PM EDTNews

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To: Kirk © who wrote (1814)12/27/2017 9:32:02 PM
From: Elroy   of 1929
I don't think a NAND maker would buy SIMO while it's successful (ie, growing). If one NAND maker bought SIMO, then the other NAND makers wouldn't want to buy controllers from the company that bought SIMO.

So the acquirer would have to be a large semiconductor company that (for whatever reason) wants to sell controllers to the NAND makers.

For PE - SIMO has about $10 per share cash. And with some decent revenue growth SIMO will probably make $3.50 in 2018, so hmmmm, $3.50 x 12 = $42 plus $10 cash = $52 share price.

So that gives a PE off of 2018 number of 12x or 13x. That's the number for PE that I'm using - a forward PE guess / forecast.

If the industry just picks up a touch it should be pretty easy for SIMO to grow revenues 15%-25% in 2018. Usually stocks with revenue growth like that trade above at 20x PE.

My guesses as to who might acquire SIMO would be AVGO (that's all they do these days, acquire companies) or MRVL or MCHP (they make other kinds of controllers I think). But it's just a guess, SIMO is pretty unique in the semi industry I think, only MRVL and Phison have similar product lines, and SIMO seems to be kicking their butts.

Debt? SIMO ain't got no debt. I assume a tech acquisition would be with the acquiring company's stock, but who knows?

Maybe Intel would acquire them, but then you risk losing SK and WDC and MU as customers.

It sort of makes sense (perhaps) for Intel to acquire MU, SK and SIMO ....... but that would be quite a doozy of a deal. But think about it. If Intel acquires MU and SK (and SIMO's controller tech as well) then the consolidation in memory is great for the industry (both DRAM and NAND). No idea how you get around the regulators, but that's what I would be proposing if I were Intel CEO and wanted to make a "big impact" deal.
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