Cycling Into a Big Year for Tech Stocks - Barron's Online
Cycling Into a Big Year for Tech Stocks - Barron's Online
An interview with Michael Cahill. He launched a global technology, telecommunications and media fund for $4.5 billion Manhattan-based Chilton Investment in 2000, he's delivered returns of 119% net of fees, compared with a loss of 45% in the Nasdaq in the same span. Last year, his smart stock picking led to gains of 22.65% after fees. He accomplished that feat with a risk-averse 55% exposure to the market.
Highlights of the interview :
Big themes for the coming years :
1. Vista
2. Videogame Consoles ( Wii, PS3, XBox360)
3. 3G, Wi-Fi 802.11n, WiMAX
4. Video-on-demand over the Internet
5. Increasing Bandwidth demand
6. Solar Industry
7. Anadigics - supplier for Qualcomm 3G phones, Intel for Wi-Fi and WiMAX chip sets, chips for Cisco's Scientific-Atlanta, chips for set-top boxes of Motorola. 45.2 million outstanding shares, trading at $9 a share, $400m market cap, $1 a share of net cash, estimated earnings - 50c in 2007, 90c to $1 a share in 2008, it was break-even in 2006. 60% of all announced 3G phones have Anadigics chips, company will be helped by a move to 802.11n and WiMAX. Expect a new share offering to bolster their balance sheet (customers are asking for it as they need more supply). Expect a top-line growth of 30%. Currently trading at 9 times, earnings are increasing, multiple of 15-20 is possible.
8. EchoStar Communications - trading at 7.7 times 07 EBITDA and 6.7 times 08 EBITDA. Ebitda growth 18% in 07 and 15% in 08. $2.50 free cash flow per share in 07. Current share price $40. 3000,000 new subscribers in Sept compared to 165000 new subscribers for DirectTV. Expect an appreciation of 20% in the stock over the next year. Expect a buyout from AT&T or DirectTV.
9. Cable and Phone companies - Main theme is again broadband. Cable companies need to upgrade from 750 MHz to 1GHz. AT&T and Verizon - push on fiber-to-the-home. But fiber strategy is slow. Meanwhile cable is cutting into the Telco base. AT&T can solve this problem by buying EchoStar - adding 13 million subscribers. There are some more benefits - this acquisition frees their fiber for internet usage only. They can give better video on internet over this fiber, and TV (including Hi-Def) over satellite. This acquisition will not raise any ire from regulators and it will not dilute AT&T market share value also. DirectTV will have hard time overcoming these issues if it wants to acquire EchoStar.
10. Solar - main problem is shortage of polysilicon. Polysilicon is a critical component in solar cells. MEMC (WFR) is a leading producer of polysilicon. 230m outstanding shares, trading at $52 a share, $12b market cap, $2.04 earning per share (up from 1.14 in 2005), $2.40 a share in net cash, $600 m in cash, expect earning at $3 a share in 2007, $4 in 2008, stock is at 17 times 07 earnings and 13 times 08 earnings, growth at 45% in 07 and 33% in 08. Share is trading at discount to the semiconductor industry and its growth rate. Historically it has been very volatile. Expect a downturn in the coming months in the industry (semiconductor). But expect MEMC to grow during this downturn. It is a less volatile share now.
An interview with Michael Cahill. He launched a global technology, telecommunications and media fund for $4.5 billion Manhattan-based Chilton Investment in 2000, he's delivered returns of 119% net of fees, compared with a loss of 45% in the Nasdaq in the same span. Last year, his smart stock picking led to gains of 22.65% after fees. He accomplished that feat with a risk-averse 55% exposure to the market.
Highlights of the interview :
Big themes for the coming years :
1. Vista
2. Videogame Consoles ( Wii, PS3, XBox360)
3. 3G, Wi-Fi 802.11n, WiMAX
4. Video-on-demand over the Internet
5. Increasing Bandwidth demand
6. Solar Industry
7. Anadigics - supplier for Qualcomm 3G phones, Intel for Wi-Fi and WiMAX chip sets, chips for Cisco's Scientific-Atlanta, chips for set-top boxes of Motorola. 45.2 million outstanding shares, trading at $9 a share, $400m market cap, $1 a share of net cash, estimated earnings - 50c in 2007, 90c to $1 a share in 2008, it was break-even in 2006. 60% of all announced 3G phones have Anadigics chips, company will be helped by a move to 802.11n and WiMAX. Expect a new share offering to bolster their balance sheet (customers are asking for it as they need more supply). Expect a top-line growth of 30%. Currently trading at 9 times, earnings are increasing, multiple of 15-20 is possible.
8. EchoStar Communications - trading at 7.7 times 07 EBITDA and 6.7 times 08 EBITDA. Ebitda growth 18% in 07 and 15% in 08. $2.50 free cash flow per share in 07. Current share price $40. 3000,000 new subscribers in Sept compared to 165000 new subscribers for DirectTV. Expect an appreciation of 20% in the stock over the next year. Expect a buyout from AT&T or DirectTV.
9. Cable and Phone companies - Main theme is again broadband. Cable companies need to upgrade from 750 MHz to 1GHz. AT&T and Verizon - push on fiber-to-the-home. But fiber strategy is slow. Meanwhile cable is cutting into the Telco base. AT&T can solve this problem by buying EchoStar - adding 13 million subscribers. There are some more benefits - this acquisition frees their fiber for internet usage only. They can give better video on internet over this fiber, and TV (including Hi-Def) over satellite. This acquisition will not raise any ire from regulators and it will not dilute AT&T market share value also. DirectTV will have hard time overcoming these issues if it wants to acquire EchoStar.
10. Solar - main problem is shortage of polysilicon. Polysilicon is a critical component in solar cells. MEMC (WFR) is a leading producer of polysilicon. 230m outstanding shares, trading at $52 a share, $12b market cap, $2.04 earning per share (up from 1.14 in 2005), $2.40 a share in net cash, $600 m in cash, expect earning at $3 a share in 2007, $4 in 2008, stock is at 17 times 07 earnings and 13 times 08 earnings, growth at 45% in 07 and 33% in 08. Share is trading at discount to the semiconductor industry and its growth rate. Historically it has been very volatile. Expect a downturn in the coming months in the industry (semiconductor). But expect MEMC to grow during this downturn. It is a less volatile share now.
posted by AshishBhardwaj at 5:03 PM
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