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Spreadtrum Communications Inc. Message Board

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  • panamax950 panamax950 Apr 25, 2012 9:48 AM Flag

    Quick Thoughts

    scleung, when you say bottom of food chain, do you mean their current position now? There growth in the last couple years certainly doesn't reflect a bottom of the food chain company. What is it that you see different about their position in market now vs. what caused their explosive growth in recent years? What is causing them to lose ground compared to their competitors?

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    • By the way, I'm not a bashing saying "don't buy" or "sell". I'm just saying it's a great trading stock. From what I could see, SPRD has nothing to keep out competitions. Just like the solar industry, it got screwed up by the Chinese. No one in there has any barrier of entry. Luckily I didn't buy and hold FSLR, otherwise, I would have lost a lot of money.

      • 1 Reply to scleung
      • Adding to this conversation (which is factual, or fact-based speculation- which is great... let's keep it that way!)- unless I'm misunderstood, SPRD's big partner/buyer is Samsung... at least in some of their phones, particularly their premiere Galaxy (which is every bit as powerful as iphone imho). That's great. Further, on Friday Samsung will likely report great profit and market share. Not parsing out what of that is attributable to SPRD, we can assume that's great.

        HOWEVER, I'm nervous about some other things, particularly as it pertains to the already sketchy Q3-4 and beyond (and aforementioned corporate silence or ambivalence, plus in shadow of May 3 which is likely going to reaffirm this ambivalence):
        (1) Recent report of Samsung investing huge in their own chip production and development... while we're told these are NOT in competition with SPRD's product, the general move is indicative of a corporate vision to consolidate. They indicated a few partnerships in that regard, but we've heard no word that SPRD is at that table;
        (2) Under best of circumstances, the price war promises to keep SPRD profit at bay... based upon credible, recent reports- their principal competitors are hardly down for the count;
        (3) For the life of me, I can't understand why SPRD trades half P/E to main competitor, but while I've been monitoring-- it's indicative of a core market suspicion/apprehension...;
        (4) Chinese market is huge... yes, but the economic landscape particularly for state-involved businesses (SPRD) is tenuous... major pressures to shift-- and resurgent issues of governmental control of matters-cyber...I don't know if this is a plus or a minus, just suggesting it adds to risk/uncertainty;
        (5) Institutional ownership may indicate some insider knowledge-- don't know which is more accurate, but Nasdaq site suggests up to present day, 48% institutional ownership (vs. 68% Google site and my Scottrade);
        (6) Insider purchasing at low of year would also be a positive sign... suggesting confidence of what they thought/knew was coming May 3... all crickets.

        The positives (in addition to above) are that SPRD is at the forefront of chip development, tracking with infrastructural development... has ability to move very quickly to market.

        I'm betting the farm that survival considerations have prompted conversations pertaining to mergers and/or acquisitions... wondering if inherent resistance/hoops exist because of prominent Chinese-gov ownership... or?

        Putting it all in a blender- I'm suggesting that unless SPRD has some unexpected cards to play (which would be contrary to their corporate MO- they have been very, very candid), we're at the general top of the range for quite awhile... with it likely to drift, if not dart, down... SPRD's historical reaction to negative /uncertainty is much more volatile than it is to the positive. There's a greater tendency for nanos to wait for the signaled low and take the ride up ... only to sell.

        Psychologically and philosophically, I am a long... which is to suggest it has taken a lot to make the shift to a immediate/ short-term profit paradigm... but many of the most wise, reasoned and successful investors I know have said that, apart from an F or INTC or AAPL that is strongly trending with good reason for more... you have to evaluate by day / week. The company and market conditions give me no reason not to do otherwise.

    • "bottom of the food chain" means SPRD needs other companies to move their products. I normally exclude retailers when I say this. Right now, SPRD is relying on phone makers, phone makers rely on carriers. Carriers are at the very top. Carriers usually have their only retail stores and/or have other retailers to sell their services.

      Companies like WMT, AAPL, MSFT, CSCO, HSY just to name a few are what I consider top of the food chain.

 
SPRD
30.930.00(0.00%)Dec 23 4:00 PMEST

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