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LTX-Credence Will Have Good News For Investors

by: Richard Jones October 08, 2008 | about stocks: LTXC    

Richard Jones

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LTX-Credence Corporation's (LTXC) conference call is on its way. Investors are you ready for some positive remarks?

I think the company will do just that. LTXC, a global provider of focused, cost-optimized ATE solutions, announced it will hold a conference call to provide an update on its merger integration plans, as well as updated financial guidance for the quarter ending October 31st. The conference call will be held on Wednesday, October 8, 2008 at 4:30 p.m. EDT.

On September 2, 2008, management of LTX-Credence Corporation (the "Company") approved a plan to terminate employees in various locations in connection with the implementation of its integration plan following the merger of equals of the Company and Credence Systems Corporation (the "Merger") that was completed on August 29, 2008. The Company completed notifying affected employees on September 9, 2008, with the exception of employees in certain international locations.  

As a result of this plan of termination, the Company expects to incur approximately $17.3 million related to employee termination actions, a portion of which will be recorded as restructuring charges in the quarter ending October 31, 2008 and a portion of which will be recorded as an adjustment to the allocation of the purchase price paid by the Company in connection with the Merger under the purchase method of accounting.

Substantially, all of these amounts will result in future cash expenditures which the Company expects will be paid within the next 12 months.   The Company is also finalizing plans to close certain redundant facilities associated with the Merger.

However, at this time, the Company is not able to make an estimate of the total charges related to these facility closures. The Company will file an amended report on Form 8-K when it determines such estimate and if that estimate is material.  

I expect the merged companies will report about $25 million in annual savings on the CC. LTXC has dropped sharply since the merger.

Now trading at $1.15, this doesn't reflect LTXC fair value. The book value is $1.86 and the cash per share is $1.14.   LTXC is extremely oversold at current levels.

Its 50-Day moving average is $1.74 and its 200-Day moving average is $2.49.

52 week high was $4 a share. Buying now offers very low risk and I expect the share price will double over the next 6 months. Average analyst target is $3.50.

Disclosure: New long position ahead of the CC.

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This article has 2 comments:

  •  
    Oct 09 04:39 AM
    Years ago, it was LTXX before, right ? used to own shares of LTXX, it was fine then, how did it get down to $1.15 after so long ? Beats me !!
    Reply
  •  
    Nov 22 09:58 PM
    what is wrong about the new company website ltxcredence.com ?
    Reply
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