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Silicon Image Inc. (SIMG) Message Board

  • cantgthrtondirt cantgthrtondirt Feb 16, 2006 5:39 PM Flag



    overvalued= DUMP

    This topic is deleted.
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    • Yes pussy cat..sell you 360 shares....wanker

    • Thx, I have been holding SIMG for a long while now...

    • I really do hope that Steve Tirado has learned and is being conservative with the 2006 guidance because it is back-end loaded.

    • Good post. Well thought out. I believe this stock is a winner. Hopefully they can maintain the sales growth they've been having the last couple of years.

    • dsw_25 -- it also depends on your time line. I try to buy stocks I will hold for at least a year, so I don't pay the 35% short term capital gains tax.

      I look back and say to myself had I accumulated stocks rather than trade in and out of them, I'd be much much wealthier. For example, back in 2001, I was invested in CHK at $5.45 and XTO at $16. The reason I bought them is because I believed natural gas was going higher. Instead of hanging onto them though, I sold them after making a nice 20-25% profit percentage wise, but could have made 400% had I hung onto them for the past four years.

      Having learned that lesson about letting go too soon, I'm up 150% in SPIL and about 65-70% in TEVA, having held both since late summer 2004.

      With SIMG, I think the worst is behind it. The management team has changed for the better. The guys who were pillaging the company for stock options compensation back in early 2003 are nearly all gone (during the quarter ending March 2003, the stock options expense exceeded cost of goods sold if you can imagine that). Instead of being in the red, the company is finally making money on a consistent basis.

      Due to the conservative guidance going forward, my prediction is that we will spend the year in a trading range of about $10.50 to $14 and head sideways. Unlike the bad old days, there's really no real reason for the stock to go down with 2006 earnings in the .54 to .58 range. Quite frankly, I think we're going to see an upside surprise for 2006 just like we did in 2005.

    • Excellent post dsw_25

      They should get some leverage in the income statement once they anniversary all the "normalization" issues in 2006.

      Meaning a normalized tax rate
      Expensed options - (but note that EPS estimates are already being depressed because of option outstanding due to the useage of fully dilluted sharecounts - so the expense in this area is strictly non-cash)

      The return on invested capital for the firm is trmendously high. 20% including all cash and securities, and close to 50% when backing this out since it is "excess" and not dedicated to running the business.

      Firms with this type of ROIC coupled with very strong margins get a high valuation.

      The flip side would be the sustainability of the growth and technology. The valuation will stay high as long SIMG deomonstrates they can growth with the HDTV market and hold market share.

      My sense from the conference call is that they can - but wanted to interject some conervatism to guidance. Afterall, the high-end of guidance gets to the consensus estimate for 2006 (which is $0.53). The consensus for 2007 is $0.65. It is reasonable to expect, that as we progress deeper into 2006, the shares will eventually trade off of a multiple to "next year's" EPS.

      So we can debate over whether they will acheive $0.65 in 2007 or not. But I think the debate should revolve around this because it is a cleaner number with a tax rate and options and the like in it.

      20x gets you $13
      25x gets you $16.25
      30x gets you $19.50

      These are all reasonable 6-9 month price targets if one believes that the technology has a niche which is defendable and sustainable and one believes the management team has the competancy to grow with the HDTV market.

      My baseline price target is in the middle at $16.25. As such, I'm going to look to increase my position if the market trades the shares down materially because the discount to my price target starts to offer a dramatically good return.

      I like the risk reward here because even if they fain in 2006-2007 and see flat EPS growth from 2006 to 2007 of lets say $0.53 - one would expect the multiple to be at a discount to the low-end of the reasonable range 20x-30x say it falls to 18x. This still leads to a $9.54 stock price.

      If I can buy in the $10-$11 range with $0.50-$1.50 in downside with $5-$6 in upside, thats great risk reward.

      The no debt, strong cash position on the balance sheet, and the positive free cash flow further support the share price.
      *not to mention the value of potential for more explosive upside to numbers as HDTV ramps dramatically (although this is hard to quantify or rely on at this point)

      Regards to owners here,

      DTV is one of the best growth sectors in tech now. I've played it owning TRID very early at $3 (I'm fully out now due to valuation) and my other top picks within the sector are SRSL, TUNE, ATYT, and potentially SYXI (as results stabilize, although SYXI is more of an indirect play).

    • It was deffinately a great cooment:

      I just hope the meaning intended was

      "To downplay or misrepresent one's ability in order to deceive someone, especially in gambling."

    • The best was Charlie...

      "I don't want to say your sandbagging us, but..."

    • I am a little disappointment too.

      I bet the PS3 revenue will be there in Q1 or Q2. BUT seems not.

      There is rumor about PS3 will be delayed to November. Seems rumor is not clueless.

    • Not like my opinion matters, but I am frankly a little disappointed with the conf call (especially with the guidance) - probably cuz I had such high expectations.

      - their revenue guidance of 15-25% growth was underwhelming when you consider the expected growth rate of HDMI devices from 17M (in 2005) to 59M (in 2006).

      I still don't understand how they can give such a low guidance (and I think several analysts on the call didn't understand either) but my guess is that the lower than anticipated guidance is due to:
      1) they are being conservative (hopefully that's the main reason)
      2) Steelvine rev will basically be non-existent AGAIN in 2006
      3) They saw some competition for 2006 design wins. The competition forced them to lower ASP to maintain mrkt share.

      - One positive from the call is the potential PS3 win. They did not confirm the win but mentioned the need to secure capacity for a rather large order in the second half of 06. Steve mentioned that this win has been factored into the guidance (I just hope they were being conservative about the rev potential for 06 since the timing of the PS3 rollout is all over the place)

      - How the market will react tomorrow will be dependent on what has already being built into the price. I would concur with some posters that SIMG should be given at least a PE of 20 - reasonable for a company growing at 15-25% in the hot sector. With the 2005 EPS of .57, the stock price should be at least 11.4. Using a PE of 25 (which I think is reasonable) should give the reasonable stock price of 14.25.

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