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Silicon Motion Technology Corp. Message Board

  • ashraf.eassa ashraf.eassa Jul 23, 2012 11:15 PM Flag

    New here, potential long needs info



    I've been looking into this company for a while, and it seems to me that it's undervalued by a lot. It beats earnings estimates, trades at a fairly low P/E multiple, and is growing at a healthy rate.

    What's wrong with it? Why has it been hit so badly over the last few months? Is there something here I'm missing?

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    • The company specific story is pretty great, but there are two NAND industry trends that are real and negative.

      The first is that the NAND flash industry sucks at the moment. There is oversupply of NAND chip manufacturing, so prices have been falling, and the NAND makers are reporting lousy profits. We SIMO investors know that low prices for NAND means more chips sold, perhaps at less profit to the NAND makers, but since SIMO is unit driven more chips is good. But still, not everyone knows what we know.

      The other negative is that microSD cards are not being bundled with smartphones at the previous attach rate. Smartphones with a larger embedded memory size are arriving without microSD expansion slots. SIMO is big in microSD card controllers, so that's bad. The microSD segment is probably still growing because the smartphone industry is growing, and SIMO might win the embedded NAND controller slot in the new smartphone that lacks a microSD slot, and embedded ASPs are double mobile ASPs, but again, that sort of sound like not good.

      So that's the bear story, as far as I can tell.

      • 1 Reply to Geezer31
      • Also Geezer I think the big run went as SIMO has the Galaxy 1 and the Samsung Tablet. As they dont have at least on the US the Galaxy 3, they have been hit a lot. if you see prices drops is when they talked about the snapdragon and Galaxy 3.

        I am waiting to see if SIMO got the Galaxy 3 for ASIA and EUROPE (as Samsung controller) and if they have a new tablet (Samsung 2). as they say in their report they have 5 new wins. we dont know if there are included.

        Anyone knows?

    • Great question. We've been baffled for sometime.
      No debt, cash adjusted ratios are even crazier than what appears.
      Short interest upwards of 10%
      Not sure.

      we'll find out in a few days
      Someone should put together a seeking alpha piece

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