AMKR - Sector: Technology --- Industry: Semiconductor - Integrated Circuits

[David Randolph]

The past said "go down":

• UPDATE - US SEC accuses ex-Amkor exec of insider trading
at Reuters (Wed 4:14pm)

The future said "go up":

• Amkor PoPs Cork for Fast Growing Package on Package Solution
Business Wire (Wed 4:30pm)

And of course, the stock went up after the lower open, because the market always looks to the future, not the past.

AMKR's valuation model says the stock should only be sold at $28.13, I'll keep holding AMKR.

[David Randolph]

Here are some nice words for AMKR on Business Week (but the article isn't new, it is 4 month old):

The Amkor Story

Growth, of course, is not a given. And these companies demonstrated a combination of innovation, specialization, and good old-fashioned financial responsibility. Consider the case of Amkor Technology (AMKR), a Chandler (Ariz.)-based semiconductor manufacturing services company that wound up at the top of the list.

Amkor's job is turning silicon wafers into finished chips, then testing them to make sure they work. It's a necessary but costly bit of silicon toil that companies such as Intel and IBM, among others, have for years seen fit to outsource to companies like Amkor, Tawian's ASE Test (ASTSF) and SiliconWare Precision Industries (SPIL). And Amkor's business, says analyst Bill Ong with American Technology Research in San Francisco, is an indicator of the wider semiconductor industry, and its success in the last year owes much to plain old financial discipline.

For years, Ong says, Amkor would plan its capital expenditures around chip demand forecasts from chipmakers. But in recent years, with chip demand becoming more difficult to predict reliably, its customers have been required to pay up front. It has also declined to compete on price. "If they're competing against someone else with a lower price, they will walk away from low profit-margin business," he says. That has helped the company turn a $137 million loss for its fiscal year 2005 into a $165 million profit for the 12 months ended Sept. 30. Meanwhile, sales surged 41%, to $2.7 billion.

Amkor was one of several companies that were affected by the surge in demand for memory chips that started in late 2005 and continued through the first half of 2006 before tapering off. Demand for NAND-type flash memory—the type of flash chip used primarily to store data—surged dramatically in 2005, around the same time that Apple launched its iPod nano music player, which uses NAND flash chips instead of a hard drive to store music.»

I especially enjoyed the following two parts:

1) 41% revenue growth, and I have just 15% expected in my valuation model

2) Walking away from competition on price will make the net profit margin grow fat. It was 6.3% in 2006 and I'm expecting just 7.5% going forward, but it is possible that actual results come in better.

I'll keep holding AMKR.

[David Randolph]

I believe there's some upside potential to my AMKR estimates, but even if they stay the way they are now, AMKR will deliver 46% share price CAGR and the optimal selling price today is $28.13, so I'll continue holding AMKR.

[David Randolph]

AMKR closed at a new 52 week high of $14.17, even though the candlestick on the chart looks somewhat bearish (I don't care about candlesticks, they're too short term oriented). Volume was quite high, at 6.4 million shares.

My valuation model says the stock will be worth $43.91 by the end of 2009, and with that information the optimal selling price today is $28.13 (at that price the stock would start returning less than 16% a year, according to my estimates).

I'll keep holding AMKR.

[David Randolph]

Another 52 week high for AMKR. I'll keep holding the stock, since my valuation model says the optimal selling price is 93% higher than yesterday's close.

[David Randolph]

AMKR's results will also be out next Tuesday. Expectations are pretty low for this quarter, so probably the company will beat estimates. My valuation model says the stock is getting even more attractive, because the Semiconductor - Integrated Circuits industry average earnings multiple has been rising.



The stock closed at a new 52 week high yesterday. I'll continue holding AMKR.

[David Randolph]

Zack's also like AMKR:

«Amkor Technology, Inc. (Nasdaq: AMKR), a Zacks #1 Rank (Strong Buy) company, posted fourth-quarter results in early February. Earnings per share totaled 30 cents, outpacing the consensus by 36%. AMKR said its fourth quarter saw continued strong demand in 3D package solutions and Flip Chip packages for high performance applications, including all three major game consoles, networking and communications modules, offset by a decline in demand for packages supporting wireless and other mobile devices. The company's price-to-sales ratio stands at 0.95, and it experienced earnings per share profitability of $1.04 over the past 12 months. Results for the second quarter will available on May 1, 2007.»

Results will be out tomorrow after the close, and the company's guidance is:



A relatively slow quarter is priced in, so I guess there's room for a positive surprise. The one time charge relative to the $300 M debt refinance will only hit in Q2 2007.

I'll keep holding AMKR.

[David Randolph]

AMKR had a 4.3% sell off today, on average volume of 3.7 million shares changing hands. I guess people are afraid of the earnings report that will be out tomorrow after the close. Obviously I'm not afraid of earnings news, since I need them to profit over the long term.

Due to immaterial changes to the 2006 10-K report filed with the SEC at February 26, 2007 we got a brand new share count today of 179,424,027 shares outstanding, which is consistent with the 2% dilution factor I have on my valuation model, since the share count rose about 0.7% in Q1 2007 from Q4 2006 (well, probably a 3% dilution factor suits better after all, let me make that change).

There was also a multiple contraction at the Semiconductor - Integrated Circuits industry, as the Nasdaq went down today. Still, the valuation model results paint a very rosy picture for AMKR.

I'll hold the stock through the Q1 earnings release, I'm particularly interested in earing about guidance for the next quarter and hopefully for the full year (they usually just talk about the next quarter).

[David Randolph]

Q1 results for AMKR were out after the close:

• Amkor Reports First Quarter Sales
Business Wire (Tue 4:05pm)

Revenue and sales came in above the Street estimates, with sales of $651 M against estimates of $640.5 M. And EPS was $0.18 against the $0.15 consensus estimate.

Let me analyze the results in light of variables I need to estimate in my valuation model:

1) Dilution factor

One thing caught my attention and I sure didn't like it:



The # of shares outstanding on a fully diluted basis increased 15,776,000, or 8.27% since Q1 2006. This will make me increase my dilution factor from 1.03 to 1.083. Management continues not to work in the best interests of the company's shareholders.

2) Revenue CAGR

As you know I had 15% (or 1.15 in the valuation model) as a revenue CAGR estimate for AMKR. But sales were up just 1% in Q1 2007 from Q1 2006 levels. And, according to the company's guidance for Q2, revenue is expected to be down 1.8% from Q2 2006.

So I can't maintain a revenue CAGR estimate of 15%. Well, considering the second half probably will be stronger than the 1st half, let's put it at 5% (or 1.05).

3) Net Profit Margin estimate

Net profit margin in Q1 was 5.3%. Considering the second half of the year will show stronger sales I believe I'm able to maintain my 7.5% net profit margin estimate.

4) EPS multiple estimate

The Semiconductor - Integrated Circuits industry is trading at an average EPS multiple of 28.25. That's going to be my EPS multiple estimate for AMKR.

Let's roll the model:



Brrrr, expectations were considerably cut. I'm starting to wonder if I shouldn't look for at least 35% expected share price CAGR, since I'm looking for a 30 - 40% long term annual return on my investment. The way the optimal selling price is calculated, it considers I'm interested in 16 - 25% returns, which I'm not.

This strategic change would make AMKR not attractive, and probably I'm going to make it, because it makes sense to me.

Therefore the trading plan for AMKR is SELL, I need to look for more attractive holdings.

[setravis]

CHANDLER, Ariz., Jun 11, 2007 (BUSINESS WIRE) -- Amkor Technology, Inc. (AMKR, Trade) today announced that it has repaid, from cash on hand, the outstanding $21.9 million aggregate principal balance of its 10.5% Senior Subordinated Notes due May 01, 2009.

About Amkor

Amkor Technology, Inc. (AMKR, Trade) is a leading provider of advanced semiconductor assembly and test services. Amkor offers semiconductor companies and electronics OEMs a complete set of microelectronic design and manufacturing services. More information on Amkor is available from our SEC filings and on our web site: www.amkor.com.

SOURCE: Amkor Technology, Inc.


Amkor Technology, Inc. 
Investor Relations, 480-821-5000, ext. 5388 

Copyright Business Wire 2007


Today's closing chart.......

[wrangler]

AMKR : Buy alert was given : could be time for bounce JMO
I have no position

[wrangler]

AMKR : up +0.40 so far from alert I posted this morning
Goodluck trading

[wrangler]

AMKR : Buy alert was given : could be time for bounce JMO
I have no position

Would've made a great bounce play

[setravis]

I think it has the looks of a,
Head and Shoulders Bottom (reversal) Pattern here.......
Time for a move up again target $11.50 to $12.00,
JMHO... looking to close the gap.

Support @ $7.71
Resistance @ $8.67...9.53...9.94

Recent CandleStick Analysis
Bullish
Dec-12-2007 Homing Pigeon 


52wk Range: 7.60 - 16.29
Volume: 1,354,408
Avg Vol (3m): 2,346,660

[BigSully1]

ER last night