Don't sell TRID
I just listened to the call and feel better.
The fundamentals are strong and improving
1. Selling into the world's biggest TV makers. Already dominating at Sony, Samsung and Sharp.
2. Increasing marketshare: they estimated 30%~35% marketshare for worldwide TVs. Going forward, they are adding Philips as a customer (at GNSS expense) and have additional design wins in the pipeline at other customers
3. New products to be released in March (motion estimation/motion compensation - key for European market)
4. Targetting the Chinese market especially the set top box market (remember - the boss is Chinese and has established relationships with Heier)
5. Flat panel TVs are getting dominated by large (40"+) screens - which require a great deal more graphics horsepower
They have clear command of the company. They communicated a lot of key information specific to a semiconductor company:
1. ASPs dropped 5% last quarter and will drop another 5% next quarter - in line with high volume chips. New chips will have higher ASPs, keeping margins whole
2. Inventory increased $5M, as they ramp up for the holiday channel
3. Costs were clearly articulated (the accounting review costs, move costs, ramping up hires, new commissions for the channel sales, etc)
4. Growth will be flat next quarter (due to front loading) - and that's different from previous years.
5. Margins will drop by 1% but remain in the low 50%s range for next year
Now, if sales have grown over 250%, and margins have remained constant, then this equals a 250% increase in earnings, driving them to a 25 P/E for the last 12 months.
The only negative is that the US market is tending towards an integrated HiDTV solution and TRID's solution is late.
The options issue is the #1 problem here. They said that it will be resolved in 3~4 weeks.
I say people panicked because no earnings were provided. I am incredibly disappointed that they did not resolve the options issue in time, but they are seeing solid growth.
Also, the analysts were very complimentary, more than usual on these calls ("great job, guys"). I think there could be some mixed analyst updates and possibly more complimentary
I am not going to let a 10% price drop on panic push me out. I expect them to drop further tomorrow as retail customers see the drop and push the sell button. But I am definitely a true believer - they are delivering solid results and are incredibly underpriced.
The fundamentals are strong and improving
1. Selling into the world's biggest TV makers. Already dominating at Sony, Samsung and Sharp.
2. Increasing marketshare: they estimated 30%~35% marketshare for worldwide TVs. Going forward, they are adding Philips as a customer (at GNSS expense) and have additional design wins in the pipeline at other customers
3. New products to be released in March (motion estimation/motion compensation - key for European market)
4. Targetting the Chinese market especially the set top box market (remember - the boss is Chinese and has established relationships with Heier)
5. Flat panel TVs are getting dominated by large (40"+) screens - which require a great deal more graphics horsepower
They have clear command of the company. They communicated a lot of key information specific to a semiconductor company:
1. ASPs dropped 5% last quarter and will drop another 5% next quarter - in line with high volume chips. New chips will have higher ASPs, keeping margins whole
2. Inventory increased $5M, as they ramp up for the holiday channel
3. Costs were clearly articulated (the accounting review costs, move costs, ramping up hires, new commissions for the channel sales, etc)
4. Growth will be flat next quarter (due to front loading) - and that's different from previous years.
5. Margins will drop by 1% but remain in the low 50%s range for next year
Now, if sales have grown over 250%, and margins have remained constant, then this equals a 250% increase in earnings, driving them to a 25 P/E for the last 12 months.
The only negative is that the US market is tending towards an integrated HiDTV solution and TRID's solution is late.
The options issue is the #1 problem here. They said that it will be resolved in 3~4 weeks.
I say people panicked because no earnings were provided. I am incredibly disappointed that they did not resolve the options issue in time, but they are seeing solid growth.
Also, the analysts were very complimentary, more than usual on these calls ("great job, guys"). I think there could be some mixed analyst updates and possibly more complimentary
I am not going to let a 10% price drop on panic push me out. I expect them to drop further tomorrow as retail customers see the drop and push the sell button. But I am definitely a true believer - they are delivering solid results and are incredibly underpriced.
posted by Andrew at
10:16 PM
2 Comments:
Given this news, would you hold jan 20 calls??
Yes, I do. I bought the Jan 25s before close (ouch).
This is risky, but uncertainty is driving the price down. They expect to resolve the options issue within 3~4 weeks, removing the uncertainty. Hard to predict, but the market seems to respond favorably to companies once they close out the options issue
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