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EZchip Semiconductor Ltd. Message Board

  • comstockcir comstockcir Nov 13, 2012 1:48 PM Flag

    EZCH_LONG i have a question for you

    can you help me out in regards to 2013.. I know they will have 5 customers ready for 2013 but what type of revenue growth are you talking about? I mean at this point it has been miniscule revenues quarter over quarter over the last few years. When is EZCH going to hit the bigtime and start really getting tons of revenue? PLease advise and how youd you recommend to play this name for 2013

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    • comstock, EZ will have many more than "5 customers ready for 2013". those 5 are just the biggest (5 of the 7 possible Tier 1 providers) that will do the most volume as a single buyer, and are easiest for analysts to model and acquire info about. but remember there are many more small regional niche players around the globe too, that when combined will equal a good portion of total revenue. Personally I think that revenues are not as important as earnings, because much of EZ's sales model is more like a royalty business with their largest buyer. EPS to the bottom line are what will ultimately matter, at 50%+ NET margins of total revenue on a tiny number of shares outstanding. Here are some ballpark numbers.... If EZ does a round $90million in sales, that is equal to about $3/share in revenues, which equates to about $1.50/sh+ in NET eps. EZ revenues are projected to more than quadruple by 2016 (from $80M out of $130M industry total in 2011). That industry niche is projected to grow from $130M in 2011 to $800M in 2016. What p/e would you put on a company growing to $300-400million+ in 2016 (from ~$55M by FYE-12), with net margins well over 50%??? It's not the short term stock price swings or revenue results that matter to me as much as the long term ramp of eps ahead, based on EZ's overwhelming industry majority design wins. I look to accumulate shares whenever panic sets in, to build long term wealth versus short term trading income. Any short term "lumpy" setbacks just allow me to acquire more shares at cheaper prices, until all those industry leading/dominating design wins begin to pay off. Well.... I hope that helps you understand MY views. Good luck with reaching your own goals.

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