Too many hidden assets. Below is a briefing after I heard the CC. I suggest everyone should hear it, it tells you lots about PSOC. Look at LSI! They did some work to restructure and stock rockets. CY is sort of LSI, a combination of everything with lots hidden jewels. I am going to buy more, even I already own a lot.
==================================================== CY ? 3/14 CC
No.2 SRAM Tighter expense control Inventory too low
CCD: 38% rev. from CCD, GM 45%, normally 50%, constrained in 2nd half and fab charge. Clock and PSOC in Gaming, PC, digital TV. No. 1 in USB. USB moves into industrial world.
PSOC: addresses to micro-controller, MiCrochips the best comparable (MCHP) (over 6 times EV/S), 1000 customers. One product could penetrate 10,000 customers in some area we didn?t even ever think about it. Programmable and software are the key differentiator. Easy-to-use, I play myself. Components to be saved when uses PSOC. No pricing pressure, huge cost advantage. Design win in LG cellular phone, Gameboy. (MP3- player ? I don?t have picture, we don?t talk about it publicly. IPOD?)
PROC: combine PSOC and USB. Barrier to entry.
PSOC+PROC did $50 millions in 05, will grow to at least $100 millions in 06, high-margin for proprietary sales. Margin is there once you enter design. No commodity pressure in the segment. Cross-selling into new customers.
MID: 30% of rev. GM 30%
Stabilization in SRAM price. 90mm conversion, break-even targeted.
DCD: 14% of rev. 64% margin
Re-invest in pure play wireless and data-com products. Introduce product in handset will contribute growth.
Sun-power: $3-3.15 per watt. $10 billions market. $300 millions after the end of 2006. We add more lines between this year and next year to get to a billions dollar revenue basis. Not much marketing expense. (10% opex) targeting 17% operating margin. We are working with one of the partner, embedded one of our cell into shingle, a part of construction material ? sometimes ago, an analyst mentioned Sun-tile, as a part of building material, actually reduces cell cost to zero.
SLM: introduce new product this year, will drive growth.
Image Sensor: Big market, focused on Digital camera, cel phone, auto-market, night-vision application, a tip of iceberg. The company we bought in the high-end. Set strong-growth in this area.
Achieving over $1 billions dollar revenue 2nd time in history
Excellent summary. Much appreciated. I like the diversification, but some might say CY is trying to do too many things at once. With so many different product segments, it's possible the street can't figure out who to compare CY to and get a realistic sense of its value. If they can get traction with even half of these products, this would seem like a great investment. Some on this board have implied CY's fortunes will rise and fall with those of SPWR. But the CC gives the sense that there's much more promise here than just solar.
> But the CC gives the sense that there's much more promise here than just solar. *******
Yes that what they've been trying to convey: Give us credit for SPWR and also give us credit for the rest of the company.
But it's been a long time since the ill-fated transition and glory of 1999-2000. Going out of 2000, CY was headed for a huge haircut, but they had $1.1B in cash and $500M is debt. They used that cash to fund future growth possibilities. Now the cash is gone and the possibilities are lined up. The possibilites are real, but speculative, the debt has gone to $600M, and, of the < $400M in cash, much of it cannot be touched.
The $600M is slated to be liquidated end of June. We're all hoping that 70% of it converts, leaving a dilution that has part of the quarterly diluted EPS calcultions. The remaining $180M is the question. The recent sale of NSE will certainly help. CY has two essential possibilities: - Roll over at least part of it with long-term or short-term debt. If long-term, a convertible has always been their instrument of choice. - Sell part of SPWR, as fghton suggests
I'm hoping for some version of the former, because I want to own as much of SPWR (at current CY P/S) as possible. Either way, the uncertainty is holding back the stock price, which I'm expecting to go higher no matter how the issue is resolved.
Decision day gets ever closer; by then we'll have seen another quarter and updated guidance for 2006. I'm hanging in there!