Orbotech (Nasdaq: ORBK) is definitely interesting at current prices. The company can show investors one of the strongest balance sheets on Nasdaq. It has $200 million cash, no debts, and excellent profit margins. I feel that what this company lacks is a genuine desire to grow. Then again, maybe they've checked it out, and found no more room to grow, but I doubt that's the case. This is probably the reason for the company’s entry into the medical equipment field, about which we've heard almost nothing so far. I have the impression that had the company been run by an aggressive manager, he would have done everything possible to generate growth, since this is the only way to benefit shareholders. The alternative of course is to distribute the cash as a dividend.
I know that Orbotech has been looking for growth engines for some time, and if I were a shareholder, I would be asking the board just how long they intend to keep looking and how much this search will cost. In the meantime, the cash mountain is lying there immovable, so why not give a dividend to the owners of the shares that have been marking time for so long? What’s interesting is that, since 2003, Orbotech’s sales have 86%, from $228 million to $420 million in 2005. The bottom line has improved tremendously, with the company moving from a loss in 2003 to a net profit of $60 million in 2005.
The stock started 2004 at $24 and ended September 2006 at $23.7. Admit it, there's a problem here. I think it's connected with the fact that the Orbotech board is not attentive to the needs of its shareholders. They have some top people over there but from what I have seen, not one of them has questioned why shareholders are not benefiting from the company’s success. Let's put it this way: one of Orbotech’s directors is Yehudit Bronicki, the founder, CEO and president of Ormat (NYSE:ORA). I dare to suggest that she would have asked this question, had she owned shares in Orbotech.
It seems to me that, sooner or later, one of the institutional shareholders, which hold 60% of the issued share capital (if my information is correct), will wake up and demand what is due to it.
Orbotech’s situation is such that, to raise its share price, the management will have to bring a top rate public and investor relations firm that knows how to persuade institutional investors to buy the stock for the long term. On Main Street, the work of persuasion has already been done.
ORBK 1-yr Chart
Published originally by Globes [online], Israel business news - www.globes.co.il © Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.
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