WFR and Another Big Day for TRID Calls
WFR has come down a lot recently (6% today). The fear today is an Intel slowdown.
In fact, WFR has been riding the DRAM wave and that has slowed. However, iPhone and Vista demand for Flash and DRAM will bump up chip demand. The semiconductor industry moves in very short cycles.
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Meanwhile, check out the action over at the TRID january calls. A helluva lot of money being placed on the calls, almost none of Puts. In fact, Puts seem to be straddling the $20~$22.50 range.
I missed my price yesterday, maybe I'll get it today
In fact, WFR has been riding the DRAM wave and that has slowed. However, iPhone and Vista demand for Flash and DRAM will bump up chip demand. The semiconductor industry moves in very short cycles.
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Meanwhile, check out the action over at the TRID january calls. A helluva lot of money being placed on the calls, almost none of Puts. In fact, Puts seem to be straddling the $20~$22.50 range.
I missed my price yesterday, maybe I'll get it today
posted by Andrew at
9:02 AM
4 Comments:
got 20 jan 08 , 17.5 calls at 1.9. I think this is easy double if everything goes well on 26th of this month :)
Any view on JNPR.. seems up a lot after results and upgrades
andrew,
what do think about the following about trid ?
July 16, 2007, 1:59 pm
Trident: CIBC Chops Estimates; Sees Pricing Pressure Increasing
Posted by Eric Savitz
Digital TV chip maker Trident Microsystems (TRID) is being pressured to cut prices by sharp discounting by some troubled competitors, CIBC’s Daniel Gelbtuch asserted in a research note today.
Gelbtuch today cut his price target on the stock to $22 from $28, and reduced his EPS estimates. For 2007, he’s down to $1.10 from $1.11; more significantly, for next year he drops to $1.16 from $1.50.
“Although LCD-TV market trends remain robust and TRID’s customers grab market share, near-term pricing (and guidance) could be impaired if Micronas and GNSS (Genesis) put up last stands and dump products,” he says. “We believe GNSS and Micronas, whose [digital TV] units are not in good shape and are likely heading for the exits, are dumping ASPs in a last-ditch attempt to dress up their top lines. As a results, we believe Tier 1 OEMs, who are under their profitability crunches, are leaning on TRID for pricing concessions.”
Trident today also said it had received a stay of a Nasdaq delisting order.
Trident today is down $1.33 at $16.73.
thanks
TRID - Well, I may lose money on the stock and make it back on the options. (Watch me sell and then TXN buys them for $50 a share lol)
The CIBC report is mostly evidence of the TRID success at boxing out the competition. They can't compete on quality, only on price. The problem is that quality of image is very noticeable on the 40" screens that are dominating the LCD TV market.
TRID has also moved to add more features and functionality onto their chips, further distancing the competition.
LCD TV makers are in a quandary. They want more than one vendor, but there is no one except for TRID. If GNSS bails on the market, TRID is in an even bigger position of strength.
But lets consider price erosion. Apparently the analyst thinks this year is already locked in, meaning no impact. Next year, however, looks to be the problem because of potential chip dumping.
Net result is no earnings growth. Considering an expected 30%+ volume growth next year and assuming TRID's market share remains constant, that is an implied 30% ASP drop. Which is not uncommon for semiconductors - assuming that there is no incremental feature or functionality added to the chip. I don't believe that that is the case here.
I do think that they will have added cost of design-ins due to the massive number of new wins at new makers.
But let's consider it. The competitors are PXLW and GNSS
PXLW - Barely above $1.50, their revenue is falling <$100M for the year. Negative cash flow, negative profits. It's biggest shareholder dumped everything the lst 2 months. New CFO. Rats are leaving the ship.
GNSS - Similar story: falling sales, negative cash flow, negative profit.
I would hold GNSS. First of all, they have ~$9 per share in cash and are trading ~$11. They are bleeding ~$0.50 per share per quarter, but that's still barely above cash value.
A second reason is that vendors want a strong #2 and someone acquire GNSS and inject the right cash and technology.
Not this year, maybe next year or 2009.
But return to the basics: this is a product about to hit 100M units shipped per year and 200M by 2011. TRID will get massive economies of scale as their share rises.
JNPR - I can't comment. I am employed at Cisco.
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