Let's wait and see Feory, let's wait and see....
If in subsequent quarters (Q2 to Q4 and beyond) there is evidence that NXP is getting its operational costs under control, or alternatively, improving their sales tremendously to offset costs, then the stock would do well.
However, that said, there is always the psychology of people at play ... sometimes the smart Wall Street guys would buy heavily around the IPO date, thus luring innocent investors in. Then suddenly, they initiate a massive sell off of the stock.
So, let us thread carefully. :-)
Believe me, I am not being cruel, it's just mathematics. I did not just pick $3 out of thin air - go to NXP's website and check the 2010 Q1 Financial results. Their equity is currently worth $820 million and they have about 242 million shares - divide that out and see what you come up with.
Also, I think you need to read my original post about the IPO when it was priced at $19 to $21. My message was, apart from the huge loans on their books, NXP currently incurs very high operational costs that gobbles up their entire gross profit. Now I would be skeptical of buying stocks in company that cannot get its operational costs under control. Also, you would notice that their equity has been reducing for the past 4 or 5 quarters. This means the company is losing money and are in bad shape (especially because of loans and operational costs). So if they had listed at the initial $19, with the price now at $14, I would have made about 30% of my money now if I had shorted the stock like I said. Ain't that sweet money?
Nevertheless, I know the semiconductor is really booming and the psychological drive of most people would be to keep buying the stock, I am not going to risk my money on whims - the financial books do not lie. I will wait until the market determines the true price (probably at about $10).
And if you feel it is not over-priced, why was the IPO price reduced again? My original post was to attack the $19 to $21 price, and I had no idea they were going to reduce the price again. So at least its nice to see some people were thinking like me. :-)
Indeed Philips is the winner, yet KKR is not loser also. They acquired Philip semi. to 11B$ where 6B$ were borrowed from banks as was loaded as debt on new company NXP.
Recently KKR announced 6B$ what was caused by their other investments which is in my understanding not loose just payback. With NXP's (compelled) IPO offer they are going to get money on their 5B$ investment which is more or less on place as value of company, NXP fellows keep on striving to pay back depts, so indeed they are not losers at all. The real looser are the workers who lost/loosing their jobs due to this unpleasant deal.
My main concern is the timing, why now? When market started to recover, when fellows had some money to spend on growth, especially when some of the debts were pushed out to far future, why now and why to accept offer with low value? any idea
Dont be so cruel Tunrayo, u talk about a semiconductor co. not bakery. Value of $3 is simply ridiculous, indeed NXP board did gave good price, more or less it will move around this range since NXP announces a boom at profit.
It is nice to see that price of the IPO has been dropped. I was startled when the IPO price was originally set at $18 to $22. Currently, the intrinsic worth of NXP's shares is just over $3 (see my original post http://www.eetimes.com/message-board/other/4204922/NXP-s-700-million-IPO-is-over-priced).
Now, unless NXP can grow it's earnings dramatically it is not worth paying a huge premium for stocks worth just over $3. Even at $14, the IPO price is still about 4 times as expensive but at least this is a better offer than the original $18 to $20 price tag.
Philips Electronics is the real winner here. They sold at the right time and they still own 20 percent of NXP, which they can sell in the open market once the price is right. The private equity group lost a huge chunk of their investment in this deal. That's business, though. They risked a lot on NXP and lost a lot but will recoup some of their investments and move on. They'll make it up somewhere else.
After so many rumors at last its on. Besides i am sure analysis of Bloomberg was very effective to define share price. http://tinyurl.com/34cv64e
This was an expected move after IPO of KKR group, similar will happen for Freescale also. In fact 450$+ wouldnt be enough to pay back depts what KKR loaded, yet understandable cause of 6B$ loose reality for KKR. They are despairingly chasing for their money back. I totally agree with the comment of Daniel Genter which is “The premise was that these financially sophisticated people could run a business better than the people who founded it, and it turned out to be wrong"
Once again hurrah Van Houten for excellent sold out.