Shares in this bespoke microchip designer traded near £4 in their glory days, but haven’t even been in the region of £1 since 2001.
Today, shares in Arc International (ARK, 27.5p) are changing hands at a mere 27.5p. But this isn’t entirely fair, says Saeed Shah in The Independent. The company has 23p worth of cash on the balance sheet for each share, so you are only paying 4.5p a share for the business itself.
And it really isn’t that bad a business. It is true that Arc has “some way” to go before making a profit, but 2006 could mark “a turning point” in its fortunes, says Shah.
New management has revitalised the firm and trimmed the payroll. This month it also launched its new video technology, which allows digital video to be downloaded “to a range of equipment” in order to exploit “increasing demand for visual content among telecoms operators”.
The implied valuation (once you take out the cash) of this and all of Arc’s other businesses is just £6.6m.That’s too little, even if a big-name manufacturer doesn’t sign up for its video subsystem. If one does, it is far too little. Buy.
Published in Tips & advice
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by
Annunziata Rees-Mogg
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