As electronic products evolve and morph with continuing use, the basic building blocks, or wafers, that make them run change relatively little. The product’s development is not static and technological advances do occur, but the basic wafer technology that keeps our gadgets and electronic machines operating and advancing in their own right remains rooted in the basic principles of that same wafer technology. Using those basic principles to test and advance the downstream products they help to create is where a hidden and cash-rich profit center exists.
MEMC Electronic Materials Inc., a wafer and intermediate materials manufacturer to the electronic and solar manufacturing industries, continues to post higher levels of free cash and a solid outlook for coming quarters. The first quarter of 2008 may be a bit flat according to the company, as the world economy looks for a bit of footing, but its position remains very positive for the coming year as a whole.
Perhaps the company’s real strength lies in its cash and margin positions. Each is exceedingly strong and appears positioned to remain that way. A stock repurchase program is underway, indicating that the company feels confident about its current position. There may be a few glitches throughout the coming year but, generally, the company is ready for more solid performance.
Keeping pace with ongoing wafer trends keeps the company on the leading edge. MEMC Electronic Material’s worldwide manufacturing presence enables it to meet this demand and profit by it. In fact, the solar wafer business has become a significant portion of the company’s business, as seen by its inclusion of warrants from Suntech Inc. and two new contracts that will occupy just under half of the company’s revenue forecasts. In the short term, there are growing pains associated with the solar wafer end of the business, but they are considered minor in the long term scope of the solar segment. The company is working at the cutting edge of new market developments, and plans to profit whatever development issues may present themselves along the way.
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