UMS Holdings

[Boon]

WOW!

No kidding ! Andy Luong sold 10 million shares yesterday.

What is going on?

http://infopub.sgx.com/FileOpen/eFORM1V2...eID=300592

(vested)

I have spoken to their IR. Though they are not able to share any "insider" info or any additional info not discussed here, they are of the view that the company is still in good shape. Its also not easy to remove UMS as their vendor as a lot of biz are some kind of strategic partnership..maybe joint collaboration, etc.

So for those buddies that are holding on, just have to bite the bullet for now till the dust has settled.

Still vested.

I suppose you have to take it with a pinch of salt. You can't expect them to tell you to "run road".
Although I do agree that it is kind of pain to change supplier, especially those that involve precision engineering parts and system integration. To change to a new supplier, it involves recruitment and training of engineers, certifications, migration of processes, generation of documents, linking up both technical teams and lots of teleconferences.

Unless the supplier is simply intolerable....

Just my 2 cents Kaypo...

Supplier competition does not jut restrict to new outsourced supplier B, but also AMAT strategic will or cost analysis to do in house. In terms of capability, it will definitely not be a issue to do inhouse, only when it makes cost efficient sense will a company outsourced its manufacturing to focus on higher value manufacturing. While the threat of a change of supplier might not be that big, that threat of lower margin is very real.

And that is a fundamental issue of putting too much fixed cost into the structures.................................
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AMAT was at Credit Suisse Technology Conference held on December 3, 2013 and during the Q&A session, the statement by Bob Halliday:

Question: John Pitzer – Credit Suisse

Well, Bob, when you think about the Tokyo Electron transaction the cake is truly the fundamental synergies on the product side. I would argue the icing is some of the financial advantages you will get.

Can you walk a little bit through those advantages and, just in general, your view of cash flow and uses of cash and return of cash to shareholders?

Answer : Bob Halliday (AMAT)

Yes, there's a couple of leverage points there. One is generating more income and the second one, which is really fundamental, is generating better cash flow for investors. I think we have a real opportunity for both.

Because the combined companies in the strong wafer fab equipment yield like 37, we said we could do 18 billion. But even in a lesser year, we think we can do significantly better operating margins and that is really my focus for Applied and the combined companies to generate significantly improved operating margins even regardless of the volume. Okay, the wafer fab equipment volume.

So if you can generate 20%, 25% operating margins – and that is very viable even in a low year. Because you look at 50% drop through pretty strong IPs, strong product positions, good service business, we model 25% operating margin. I think that is very doable even in an off year. I don't know why we can't get to 20% or so. So then, what gets to investors? Cash, right?

So if you look at the semi cap industry it is an industry that inherently can generate significant cash returns as long as you don't get too much fixed cost. Because the industry tends to cycle up and down.

So if you look at the history of the industry, you have one boom year, one year you are ascending, its chaos growing, one year you make a lot of money and one year you write off everything. And that is a fundamental issue of putting too much fixed cost into the structures, too much time, it takes too long.

So, if you take these costs and time out you can make 20%, 25% operating margins pretty much year in and year out. And it is cash margins if you do it right. Because we don't have to invest a lot in fixed assets. Its receivables and inventory we cycle up and down and so the cash-operating margin can be 20%, 25%.

And what this merger unleashed for us was almost a unique opportunity structurally to merge the companies. One of the Japanese operating companies was an American operating company and put the parent company structure in Holland and also put a lot of the manufacturing and intellectual property value added through Singapore, which we have already sampled out of that.

So what you get is a much greater flexibility of moving cash around the Company, and returning dividends and higher share buybacks to investors. So, I think it is almost uniquely positioned as a company that can generate high cash returns to investors. And if we are successful in growing the Company, it's a big tech, potentially strong growth. Very high cash-generating business.

http://seekingalpha.com/article/1875061-...art=single

(vested)