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HistoricalPEGuy (62.31)

IMOS - Can it really be this cheap?

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May 28, 2007 – Comments (0)

Answer = Yes.  Why?  Because the DRAM market is tanking.  Prices for DRAM have continued to free fall for the last 3 months and only in the last week has there been a bit of an uptick (which is not expected to last).

ProMOS, a major client of IMOS, will be burning cash until the DRAM market recovers.  This is not a good thing for IMOS - becuase ProMOS and other chip makers must cut production to stabilize prices and manage costs.  The Flash segment is more stable, but also falling.  Simply put, demand for IMOS' services is drying up.

However, this all extremely short term stuff (at least I like to think so).  The DRAM market is very fickle and goes through periods of high prices to low prices rather quickly --- check out www.dramexchange.com, specifically the news pages -- they are free.

So given that 1) We are in a bottoming out phase and investors are worried about the short term in the DRAM market, 2) everybody hates this sector, 3) IMOS is in a solid and profitable state and 4) IMOS is trading at 0.84 of book value ---- I am continuing to buy more IMOS.  For contrarian/value investors, this is a great oppurtunity to really dive into research on IMOS and decide if its right for you.

--HPEGuy

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