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EZchip Semiconductor Ltd. Message Board

  • derif derif May 15, 2007 10:27 AM Flag

    Conf call

    So far, only info that is really relevant and important IMO:

    1. They think they can increase op margins as they increase revs

    2. They will be doing a roadshow in U.S in June.

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    • derif, it seems you agree with my dilemma. we are all relying on a lot of "if's" right now as longs. and if there is a secondary offering once ezchip is fully exchanged and owned 100% by lnop, that market cap number goes up even higher on the same share price. so until we see the "if's" finally paying off just a little bit for the np-3 mostly (according to eli this is the most important source of potential future significant revenue for the company at this time), we are still stuck in "hopeland". when the very first large order for np-3's goes on the books, that will be the signal to open the gates and let the horses free imho. until then we individuals are all at the whims of the market makers and deep pockets that can move this stock at will, one way or the other.

    • Now, Wall Street always over does things both ways and LNOP may get a 50-75 multiple on this outlook. Since stock prices try to discount the future, not the past, one would logically conclude that LNOP may start to trade at a multiple of next years projected earnings some time in the near future. Of course, at this point, there is no official coverage, and therefore, no official published estimate of revenue and earnings for LNOP for 2007, 2008, so it's hard to speculate on a public multiple of earnings. I suspect this is why LNOP is heading out in June to do a roadshow and possibly interest a sell side analyst enough to initiate coverage and publish some estimates. Now, certainly the market is likely to discount any projections since LNOP/EZ are in a position where they will have to prove they can go from a development stage company to an effective, executing production operation. I will say the risks of missteps seem limited however since they are fabless and they seem to have indicated on the conference call a very good visibility of their operating and fixed expenditures regardless of the revenue run rate. Hence, the power of the leveraged situation they find themselves in. So perhaps, if an "official" estimate of say $.50 is published for 2008 and $1.25 for 2009, put a multiple similar to FFIV or NETL and you get a stock that today could trade at 30x 2008 estimates, or ironically, $15. If we do look to do a revenue multiple calculation cased off the same above mentioned outfits, we get a multiple of 6-7x or a current stock price of $14.25-16.50. Anyway, perhaps the market really is efficient. The key here is that what I have suggested could be very conservative estimates, so upside surprises could make this a momentum stock extraordinaire in the coming 6-12 months and one can only imagine someone like Cramer on CNBC doing a piece on LNOP hitting the BUY,BUY,BUY button someday and ratcheting this thing to way overvalued heights. (Cramer, by the way, has a lot of friends over at Goldman Sachs). Anyway, just my perspective. Time will tell.

    • my biggest problem, as a long investor who relies upon a fundamental foundation to support a stock during tough times, is justifying any additional price gains in the face of more dilution (final 22% share exchange & secondary ipo) and such miniscule revenues. without a secondary, the total shares outstanding are predicted to be 24 million, which at current prices of $15 or so makes the market cap already a heady $360 million. assuming they do a 6 million share secondary, making total outstanding shares a nice and neat 30 million shares, that puts the market cap at $450 million once they own ezchip completely. and that is holding the current price static!
      <<

      Well, let's use the info from the conference call, that the outstanding shares will be 21 million if the balance of the EZ Chip ownership is converted to LNOP stock. Assume a stock price of $16. That yields a mkt cap of $336 million. Now, is that outrageously expensive for a company with $3.9 million in revenues last quarter and is losing money? To the casual observer the answer would be yes, absolutely. I wouldn't be surprised if people who shorted stocks for a living weren't seriously attracted to LNOP as a screaming short candidate. The big problem with this analysis is that we may be dealing with an inflection point situation here, i.e. EZ Chip/LNOP *may* be transitioning from effectively being a development stage company to an exponential revenue and earnings growth machine. This is clearly subject to great variation of opinion from one end of the spectrum to the other. If we assume LNOP gets 100% ownership of EZ Chip in the near term and EZ does $50 million in revenues in 2008 with 40% net margins (far below my previous speculation), then that equates to $.95 in EPS. Then if analysts jump on board and estimate that 2009 revs will be $100 million with $40 million in net income or $1.90 in EPS, well, you have a company with 100% YOY revenue and earnings growth on your hands.

    • First, let's address the articles in the Globe which you perceive to be hype. The one article is writtne by a guy who is long LNOP stock. Well, what's he going to do, just by telling you he is long doesn't that pretty much insinuate he is going to be extolling the bullish case. The other article is quoting Eli Fruchter, who has already positioned himself as a man who is not going to hype his position or give any specific guidance whatsoever from a financial standpoint. The company has done a job with presenting the information that they must beleive is true and allowing those willing to do some number crunching reach their own conclusions about the potential they see. Whether these figures and assumptions are conservative, aggressive or laughable is a point that seems to be hotly debated, with Mr. Schmitt seemingly coming down on the side of these assumptions being, at a minimum aggressive, and maybe laughable. On the other side sit George Gilder and Charlie Burger, who, even I admit, are frequently eternally overly optimistic about everything, although, as the saying goes, even a stopped clock is right twice a day. Is LNOP one of those times that clock will be right? I guess that's why I am here, trying to figure that out.

    • pats194fan, you quoted me but forgot to include the next sentence.....

      "95% of those names never share anything relevant or useful for trading, they just criticize anyone that posts anything they don't agree with."

      thanks for validating the accuracy of my comments.

      lol@u alias boy. try to post something smart about the stock or the company. do you even know what business they are in? do they provide you with a cheat sheet before you clock in at the boiler room pumper palace? lmao@u

    • "just be careful who you listen to. the "list of 40" is a good start for your ignore list."

      Sounds pretty arrogant to me....who are you to tell people who they should to listen to?

      You have already turned new posters away with your pathetic "alias list" and your brash posts.

      Starving for attention are we?

    • Someone keeps talking I don't hear them!
      Do you?

    • lnop_board_monitor,

      you have already admitted here that you created the alias "maconmonies".....
      my post exposing your alias:
      http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_L/threadview?m=tm&bn=27937&tid=18005&mid=18030&tof=-1&rt=2&frt=2&off=1
      your post admitting your alias:
      http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_L/threadview?bn=27937&tid=18005&mid=18035

      almost every single one of your posts (using your many aliases) only criticize others, and offer no substance about lnop stock trading or ezchip's business.
      http://urlcut.com/aliasboyprovenguilty
      http://cuturl.com/?aliasboys-word-choices

      why do you even bother to post anymore? do you really think anyone pays attention to your schoolyard namecalling, bullying, and graffiti writing on this public wall?

      please keep your comments "on topic" going forward, for the good of all readers and newcomers......

    • nodoze, there is no need to get so upset. the 24 million share figure was published in a recent globes article:
      http://www.globes.co.il/serveen//globes/Printwindow.asp?did=1000197324

      i don't recall you or anyone else getting so mad at that article's author. i do remember how many of you only focused on the positives. i try to remain balanced.

      i just used that author's work based on his own investigations as a reporter and fellow long of lnop. as an owner, why would he lie about his calculations?

      personally, i think ceo eli is ignoring the employee owned shares as "not outstanding" because they won't be part of the "float". but that is just a guess based on all info.

      if it *is* 21 million shares fully exchanged before any secondary offering, this would lessen one of my concerns about financial ratio calculations (mkt cap vs revenues & eps).

      if we could prove or rely upon that 21 million share figure you gave, and disprove the 24 million reported in globes, i think that would help reduce that uncertainty for newcomers too.

      i'm not here to bash as many would like to conclude to make it easier on their brains. i'm here to help find and share a *sustainable* foundation for this stock to move up from here.

      so far this stock has moved up purely on hope and expectation, not actual financial results. you can't dispute that. it may be turning soon, but the results are still not on the books yet.

      finally, how many shares you think they will offer at the upcoming secondary offering??? when we add that to 21 or 24 million shares outstanding (<15% difference) we will be able to firmly calculate total ezchip mkt cap.

      even ceo eli said something to the effect in the conf call about the np-3 revenues being "quite far away" or "very very long off" or something like that. i will find the transcript.....

    • I call Bullshit! ... Where in the CC did you get

      "total shares outstanding are predicted to be 24 million, which at current prices of $15 or so makes the market cap already a heady $360 million. assuming they do a 6 million share secondary, making total outstanding shares a nice and neat 30 million shares"

      Eli stated approximately 21 Million shares after the remaining 22% are converted to Lnop stock. As for the dilution .. THERE IS NONE. LNOP OWNS 78% of EZCHips additional share are issued to BUY the remaining 22%. Its a wash, more outstanding LNOP shares, which are offset by the increased ownership in ezchips.

      Great CC .... ALREADY shipping samples of the customized NP3 to the major tier 1 (IMHO CISCO). ... You may be able to pick this up before it explodes up, but as soon as it gets an analyist following, its gone...

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EZCH
24.44-0.39(-1.57%)Sep 23 4:00 PMEDT

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