A look at the balance sheet of Zarlink Semiconductor (TSX:ZL)

Ottawa’s Zarlink Semiconductor has been around for quite some time, but has subtly shifted focus of late, entering more specialized markets that leverage expertise the company has gained over three decades. Like most Ottawa based telecom companies, you don’t have to go looking too far for Terry Matthews fingerprints on The Company. Zarlink was born out of the telecommunications division of Mitel, its name derived from the phrase “tsar of links” reflected its early history in networking equipment.

Recent acquisitions and joint ventures illustrate Zarlink’s move away from general chip business and into more specialized business, in particular businesses that leverage the company’s leadership position in low-voltage technology. Situations where low power requirements are important is Zarlink’s wheelhouse, and those seem to be everywhere now, including specialized items to medical devices, devices used in smart phones and in the companys’ most recent venture -a deal with CADEKA Microcircuits to tackle the CCTV and video surveillance market.

Shares of Zarlink began this year at $.89 and have more than doubled since. Is this stock still a value? We break down the numbers in an updated Quant Snapshot.

1. Price to Sales: 1

As of Friday, June 25 Zarlink had 121.6 million shares outstanding. The price, as of the same date, was $1.82. This gave The Company a market capitalization of $221.31 million. In the trailing four quarters (fiscal 2010, to March 26th, 2010), Zarlink posted sales of $220.14 million.

2. Cash to Market Cap: 33.6%

As of FY 2010 (ended March 26, 2010) Zarlink had a Cash and Short Term Investments position of $74.37 million. The Company’s Market Capitalization, as of Friday, June 25th was $221.31 million.

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3. Debt to Market Cap: 31.1%

As of FY 2010 (ended March 26, 2010) Zarlink had a Long Term Debt position of $68.9 million. The Company’s Market Capitalization, as of Friday, June 25th was $221.31 million

4. Three Year Growth: 16.5%

Zarlink posted revenue of $142.6 million in 2007. This grew to $220.14 million in 2010.

5. Enterprise Value to Sales: .98 x Sales

Zarlink’s Enterprise Value is $215.84 million, based on a market capitalization of $221.31 million, plus Long Term Debt of $68.9 million, minus Cash and Short Term Investments of $74.37 million.

All financial information about Zarlink is gleaned from

their filings with the System for Electronic Document Analysis and

Retrieval (SEDAR)

All calculations are based on The Company’s closing share price as of

close June 25th, 2010: $1.82

Sales from trailing four quarters: $220.14 million

Cash and Short Term Investments as of March 26th, 2010: $74.37 million

Shares outstanding: 121,606,782 million

About The Author / Nick Waddell

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

Comment

One thought on “A look at the balance sheet of Zarlink Semiconductor (TSX:ZL)”

marp says:

July 11, 2010 at 4:19 pm

Zarlink has focused on high growth areas and should see a robust future. They currently are enjoying very good margins on there products and from what Mandy indicated in an interview, demand is running ahead of what they can supply. A bright future indeed! -IMO

I hold shares and will continue holding.