Science Technology Essay

966 Words Sep 23rd, 2011 4 Pages
Science Technology company case
After reviewing the financial forecast from Science Technology Company and Semiconductor industry market situation, I concluded that 30% annual growth is not feasible, optimistic growth forecast is 15% .Because world semiconductor shipment kept growing, but not just semiconductor market but electronic products market was also dominated large market by Japanese manufacturers. If the company carried on with the same profit/cost structure, the company’s ROA would be 5% more or less in next 5 years, EPS would be 0.44 – 0.97 and stock price would goes down to less $10 – less $20. I can assume that there is no additional stock issuance. As of 1984, the ROA is 5.6%, EPS 0.57 and stock price $13-$37.
1.
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Major semiconductor market was in Japan (more than 50%). Japanese semiconductor supplier dominated Japanese market due to its exclusive market structure and started to increased market shares in US market, but US supplier could not do so.
3. Demands for testers from Semiconductor customer
Higher speed to go into manufacturing a new design products required more testability. To find out detective/reject before mounting on the board, to spot early production stage and ATE increased its presence in production. Sales in total ATE $359 (1978) to $1.6billion (1984) 28% /year growth, expected $4billion in 1988 at 26% compound annual growth rare.
4 .Growth driver
・More semiconductor was built in more electronic products and its shipment kept growing
・Labor rate increase required automate testing operation to reduce labor cost.
・Specialization, work division due to more complexity and high cost to develop semiconductor device tester
・Improvement of testing technology and tested devices change
・After inflation settled, interest rate decreased and corporate income tax would reduce from 46% to 34% in 1986 to stimulate more investment.
・Semiconductor agreement between Japan and USA due to lobbying and US government put pressure to Japanese government to open Japanese market.
・National project SEMATECH started to recover the position in semiconductor market.
・Plaza Agreement in 1985 allowed weak US dollar and advantaged export increase.
5. Business

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