Zeev's Turnips Patch-No Politics (ZEEV)

[Zeev Hed]

Just compare SEMI to the leader, ARW, DOS 50 vs 72 for ARW, Inventory/quarterly sales 68% vs 72% for ARW, and both have accounts payable equal to inventory (quite natural for a distributor). But ARW sells at 1.28 to book and .2 to sales while SEMI sells at .5 to book and .03 to sale. The PE basis is not comparable at all, since ARW had a very bad year so far. Sure, they could have a write off of obsolete inventory, but that is where, believe SEMI has been doing a very good job of not letting inventory get out of hand. As for their cash position, they simply pay down debt whenever they generate excess cash, they paid off some $30 MM debt in the last year (mostly by controlling working capital). Mind you, ARW's book value is inflated, their net tangible book is on third (well, 39%) of the stated book, so the discrepancy is even greater...

Mind you, I am not saying that an "accident" cannot happen to SEMI, but if that accident is continued increase in sales, and let say they just get to the $100 MM level quarterly (which they have in the past) a full additional 1.6 MM will flow to the bottom line quarterly, bringing their earnings annualy to the $3/share plus level.

Zeev