Fujifilm's Long Transformation Process Heading In The Right Direction

Japanese companies used to have a well-deserved reputation for being stodgy; while concepts like just-in-time inventory were adopted relatively quickly, many companies have allowed themselves to become lumbering conglomerates that are slow to jettison operations with poor future prospects for growth or economic returns.

That's not so true with Fujifilm (OTCPK:FUJIY), as this company has launched two significant transformations in the past two decades - one designed to give the company life after the decline of photographic film and a more recent one intended to offset weakening prospects for office equipment. Fujifilm is arguably underrated for its healthcare business and it is this part of Fujifilm that has the best prospects for taking the business forward. Although success in drug development is by no means assured, even modest expectations would seem to support a fair value 10% higher than today's price.

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Fujifilm's Long Transformation Process Heading In The Right Direction

Seeking Alpha: Atmel Looks To Maintain Its Momentum Post-CES

Microcontroller and touch specialist Atmel (ATML) had a bumpy 2013, but rode a solid wave of enthusiasm into the recent Consumer Electronics Show that has the stock up more than 10% year-to-date. I see some solid reasons to be optimistic about the company's efforts in touch, as well as its underappreciated MCU business. The pace and magnitude of gross margin improvements are significant unknowns, though, and there is ample competition in the touch space.

Atmel is not the cheapest chip stock out there, but progress with touch control and sensor attach rates will likely be well-rewarded by the market. Double-digit free cash flow growth can support a fair value in the $9.50 to $10 range, and although I can't make as strong of a valuation-based call here as I might like, I think the set up for 2014 is attractive.

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Atmel Looks To Maintain Its Momentum Post-CES

Seeking Alpha: Accuray Fixing The Margins, But Where's The Growth?

Med-tech companies don't fix themselves overnight, but Accuray (ARAY) management deserves real praise for how quickly it has addressed one of the biggest challenges of the TomoTherapy acquisition. That said, the overall system growth for this company is not yet where it needs to be and Accuray remains a "show me" story in small-cap med-tech.

A surprisingly strong fiscal second quarter
Although pro forma revenue did decline 11% this quarter, Accuray beat the average sell-side estimates for the quarter. Although adjusted product revenue fell 23%, service revenue climbed 17% from last year. The decision of Siemens (SI) to exit the linac market already seems to be paying some dividends in terms of incremental equipment placements for Accuray.

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Accuray Fixing The Margins, But Where's The Growth?

Investopedia: SonoSite Finds Its Deal

There was little mystery in seeing SonoSite (Nasdaq:SONO) get an acquisition bid. Not only has this relatively small manufacturer of portable ultrasound systems been a logical target for years, but the company began to actively and explicitly sell itself starting back in November. In a week that has seen another logical target (Synovis (Nasdaq:SYNO) get a bid from a not-so-likely buyer (Baxter (NYSE:BAX), the fact that it was Japan's Fujifilm that stepped up to buy the company makes this an a somewhat unusual story.

The Deal  
Fujifilm will be acquiring SonoSite for $995 million in cash, or about $54 per share. That's a 28% premium to Wednesday night's close and a 75% premium to the price of SonoSite's stock before it was widely known that the company was looking to sell. SonoSite is going out at a little more than three times trailing revenue, a multiple curiously similar to that of Synovis and one that is not all that robust by historical small-cap med-tech standards, but isn't so unreasonable given the performance of the company. (For related reading, see An Introduction To Small Cap Stocks.)

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