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Silicon Laboratories Inc. Message Board

  • marketisinsane marketisinsane Jun 21, 2007 10:49 AM Flag

    ML analyst warming up to SLAB

    You have to give the analyst at Merrill some credit. He was negative on SLAB before the Areo tranaction. He had long argued to get rid of that business. After the transaction, he upped the rating to neutral, and more recently to buy.

    To some people here, the success of FM tuner business seems to be a sin. I just don't understand that. If you look at the past of the conmpany, every now and then it had a home-run product: first was the IsoModem/DAA, then Areo, and now FM tuner. Granted, I thought the PA and AreoFone could be home-runs, and I was wrong. But such is the nature of business: you keep bringing new products out, but you can't be 100% successful all the time. I think we should give SLAB due credit for the success it has had thus far. For a small company like SLAB, this is not small feat.
    The broadcast division is onto something big in digital video arena. FM tuner is not the end of the story.
    I don't understand the rationale of shorting the stock at these levels. With the kind of LBOs and M&A activities out there, I think the stock has a floor of low 30s. If you short, the best you can make is a few bucks. But if SLAB can hit mid-teen growth and gradually improve the op margin to 25% (which is highly probable based on my calculation), we will be looking at a 45-50 stock price. Do your own math.
    And what if the digital video product it is working on proves to be a real hit (just like the FM tuner)? Then the Momentum investors will be all over the stock. Where is the upside of shorting here? Please educate me.

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