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TranSwitch Corp. Message Board

  • ochsnerbier ochsnerbier Feb 13, 2013 9:31 AM Flag

    The Morning After

    I wonder how today will go. Did the conference call do enough to spur some larger investors to take a flyer on TranSwitch. In that case, we should expect a nice little rise of 10%. Was the conference call the equivalent of a tree falling in the forest? In that case, the stock price should muddle along on low volume. Was anyone one here emboldened by the call and do you plan to add to your position? I am inclined to add some more. I thought Dr. Ali gave some nice specifics regarding customers for the new HDPlay products. Four customers end of Q4; seven customers end of Q1; fourteen customers end of Q2; potential customers went from 50 to 70. He said they still need $5-$6 to get to breakeven cash flow. Other than Aspire, if they can get their receivables up, there is still another $2.6 million to tap. The first set of patents will probably bring $1-$2 million. If the LTB orders materialize as predicted by New Merc, that will help on the revenue and receivable side. Still a lot of "ifs", but looks promising.

    Ochs

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    • I'll chip in my $.02.

      I don't think this is a "tree falling in the forest." For some time now, interest has been building in TXCC. Yesterday's conference call was just about one hour long. That's a lot longer than usual. There were a few new investors and they all asked intelligent questions as if they had been following the story carefully. AIGH was a new investor. I looked them up. It looks like they are big investors in the chip space. They also had a proxy fight with MSPD a few years ago.

      I thought the call was quite bullish, in Ali's usual fairly restrained manner. I think the new HDPlay products address a much bigger market than the older HDPlay products. The mid-range TV market is a lot bigger than the high end TV market.

      I think the second half of the year is when you will really see revenues start ramping. The process of bringing out a new chip always involves working with customers to iron out the bugs. A lot of the problems are on the customer end as they make mistakes too and TXCC engineers have to come in and show them what they are doing wrong. That takes time and resources.

      I am really bullish on the new MHL feature. I think that adds another level of differentiation to the chip. There is no doubt in my mind that this is the perfect chip for pico projectors, which are portable devices. You will definitely need MHL or DisplayPort for that application.

      Ali also makes an interesting point about DisplayPort. The new 1.2 version can handle twice the bandwidth of the HDM 1.4 version. That means DisplayPort can handle 4kx2k TVs while HDMI can't. HDMI is going to lose market share to DP unless they can come out with a new version that can double the bandwidth. In that sense, DP is significantly ahead of HDMI at this point. If there is a major new version of HDMI, like HDMI 2.0 as Ali suggests, that would also be a big opportunity for TXCC to gain share.

      For an OEM contemplating the use of TXCC's devices (versus SIMG or Analogix or someone else) the key question is, do I need to add support for a second and/or third protocol? If the answer is yes, then TXCC chips become a very differentiated offering. If the answer is no, then there are probably cheaper alternatives out there.

      • 2 Replies to video_engr
      • video_engr,

        I like your scenario better than New Merc's. Are you buying more?

        Ochs

      • Ochs:

        "I am inclined to add some more."

        Don't. This is a very risky situation. Wait until the patent sale closes. That will provide about $1-$2 mm....enough to get them through the 2nd quarter.

        Here is the way I see it. HDPlay's market has been compromised by the inclusion of both interfaces (DP and HDMI) into the uprocessor. This removes most of the Tier 1 customer potential (who have the financial means and volume to have the processor modified). MHL is coming on fast. If TXCC can incorporate that standard into their chip quickly, they can provide a path for the current generation of HDPlay/DP customers. They can keep the customers they have and add new ones.

        Currently , TXCC has seven HDPlay customers (4 from last quarter and 3 from this quarter) with orders on the books. All combined will provide only 10% of the revenue. Uprocessors will be available by year end to the general customer base with the some type of DP and HDMI interface circuitry included. Forget about the 60-70 apps. You need 4-5 high volume customer apps to be successful

        All this means is the development of a fast track program to produce a 3 interface IC at a competitive price is necessary. That's why they need to raise $5mm-$6mm rather than a million a quarter for cash burn. Can TXCC do it? Risky.

        I would watch the insider buys for clues.

        Good luck.

        New Merc

    • After 20 minutes, it appears to be a non event.

 
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