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I just ran an Inherent Value calc on Xicor with the following inputs:

Revenue Growth Rates: 20% for 3 years, followed by 5% in perpetuity.

Fiscal Year 2000 Revenues: $138M (Source: 1Q Actuals + Chase H&Q projections for 2Q,3Q,4Q)

Operating Profit Margins - 17% (Source: Chase)

Tax Rate - 35%

Cost of Capital (self-calculated) - 11.3%

I discounted the Free Cash Flows for an explicit period (3 years) followed by a residual period and arrived at an inherent value of $18.51. This is slightly below last weeks trading range and significantly above current price of $6.31.

My most conservative (WAY overly conservative in my opinion) valuation has an IV of $8.06, a premium of 25% over current stock price. I see little, if any downside to this stock.

I have an 18 month price target of $22 on XICO. I bought 400 shares (I'm young, so this isn't a bad sized position for my portfolio) and I plan to buy 500 more in the near future.

This is now my most watched stock. Rambus (RMBS) and Cymer (CYMI) have to settle for spots #2 and #3, respectively.

- Matt
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