ATA Break-Out Just The BeginningThe new CEO is brilliant and will know how to turn things around.
1) The Precision Components Group has been an albatross forever and ATS will get rid of it. Because they do do precision machining and have many contracts there will be buyers willing to pay a small price to take this business on even if it loses money. First, the losses only last as long as the contracts. Most contracts are for 5 years and so the average life may only be 2-3 more. Second, a company like Linamar may be able to find cost savings. Getting anything will be accretive because this dividion loses money.
2) The Automation Systems group has always done well. But new hard-nose CEO will find ways to be more efficient and generate better margins. As well, last quarter they did a lot of clean-up so forward earnings will be better.
3) The Solar group was profitable, but due to supply constraints they recently lost money again. But with inhouse supply up Photowatt posied to return to solid profitability in 2008. This will allow ATS to spin it off. Better than that it is entirely possible somebody will pay a huge price for Photowatt. Also possible all of ATS could be taken-over. I believe a take-out of the whole company would be at $8.00+.