TRID Update

It is incredibly hard to watch TRID drop 20%, especially after such great earnings.
In fact, the slide began after earnings and accelerated when GNSS reported soft sales and earnings.

Most analysts are saying that GNSS softness is actually TRID's gains. That is, that GNSS targetted 2nd and 3rd tier companies selling both old-fashioned CRT TVs and flat panel LCD TVs. CRT sales are losing to LCD, so that can't be good for them. Meanwhile top-tier accounts are moving into the smaller rivals' markets. TRID is the main supplier to these top tier accounts, and it showed in their recent quarter's performance as well as in their guidance upwards for this quarter.

To quote Motley Fool's analysis of GNSS:
"Making matters worse, I think what's really happening is that the second- and third-tier vendors that make up some of Genesis' customer base are losing share to the higher-end manufactures supplied by Trident, among others. That lower revenue in turn led to the usual results -- that is, lower margins and lower earnings."

TRID will enjoy the opposite experience: higher sales will lead to better margins and higher earnings. Get back to what TRID reported:
1. Unit sales are up 2.7X - TV sales were up 140%, so TRID is selling into more TVs
2. Sales were up 177%
3. Prices dropped only 7%. Typically, silicon prices drop a lot further. This is sign of pricing power.

So why isn't this translating into a stronger stock price? Possibilities include:
Factor #1 - Investors don't distinguish between TRID and GNSS. Either from stupidity or because they don't see LCD TV strength
Factor #2 - Consumer spending slowdown fears. As rates rise, as housing strains appear, there is fear that consumer spending may slow. I don't think that will happen with these TVs, especially as prices come down
Factor #3 - TRID will lose market share because they are the king of the hill. TRID has one weakness and that is the HDTV tuner. As of March, new US TVs must include a HDTV tuner (technically, TVs 25" or greater). Ideally, the HDTV tuner and the Video Processor would be on the same chip. Ideally because it's less silicon and lower cost. TRID is a few months late with such an integrated chip. This is in no way a deal breaker, and I wonder if it will have much impact at all.
Factor #4 - June quarter is slow. Could be a drop before a slow quarter. Yet TRID announced that sales would be up.
Factor #5 - Slipping prices. In the face of aggressive price cuts from GNSS or lack of integrated chips, TRID could face lower prices. Ummm, on older and lower quality chips - perhaps. But on the TVs that will roll out in the Fall - TRID is sitting pretty. ANd that is where they are making the money.
Factor #6 - Institutional selling. I can not get visibility to this, but a small cap that moves so far so fast is clearly a victim of institutional factors (possibly hedge funds)
Factor #7 - Overpriced. It has a P/E of 111. My response - so? It grew 177%. It has a PEG <1.>100% is a big buy signal in my book.

To conclude - I don't know why TRID dropped. It makes no sense. SO I am staying with TRID - this is a strong hand and someone is trying to bluff us out. (The same thing happened at NTRI - sharp and sudden drop even though the fundamentals hadn't changed and showed signs of even improving).