The first post says that the SIMO Mobile TV SOC is in the S4. That's a different chip from the SIMO LTE transceiver. I have no idea if the first post is accurate, just want to point out that the first post (about a mobile TV SOC chip) has nothing to do with the loss of LTE business discussed on the call - it's two different product lines.
The estimates haven't been updated since the conference call yet. Most estimate now range from $1.15 to $1.20. If revenues come in as SIMO has guided I think they'll make around $1.40 for 2013. SIMO has guided expenses way too high given that LTE may vanish. SIMO's expense guidance for Q2 and full year implies that Q3 and Q4 expenses will average $20.5m, which is way too high since SIMO's highest expenses in a single quarter were $17.8m. I'll bet Q3 and Q4 expenses will come in around the $17m level, which saves $7m in costs and will all fall to the bottom line. IF expenses really do come in around the $20.5m per quarter level in Q3/Q4 it means that they have many huge development projects in the works (requiring tape outs) which should translate into a big revenue increase in 2014. We'll see.
SIMO guided 2013 operating expenses to be $72m to $76m, so $74m in the middle.
SIMO had op ex in Q1 of $15.7m and guided Q2 to be $17.5m in the middle ($17m-$18m).
If those are the first half expenses (15.7 + 17.5), then in order to get to $74m for the full year SIMO needs to spend $20.5m in both Q3 and Q4. That's ridiculous. The most SIMO has ever spent in a single quarter is $17.8m.
1. What exactly is happening with LTE?
2. Why are storage products expected to be flat to up 10% in 2013? With eMMC growth and SSD growth, is the lagacy stuff declining so much that it reduces the growth rate to almost zero?
3. Where do you expect gross margins to be exiting 2013? You surprised us with a big gross margin reduction in Q3 2012 and now again with only 41% in Q1 2013. Why should we not expect future negative surprises in the gross margin line?
4. What's the status of adding a third major OEM as a eMMC customer?
5. Did you buy any shares in Q1? Why not?
The Bad - It appears in the worst case LTE revenues may head toward zero and stay there. They already did $12m in mobile revenues in Q1, so there may not be much LTE revenue left to come in 2013.
Why was gross margin 41% in Q1?
Why is non-LTE business only growing 0%-10% in 2013? eMMC grew 30% sequentially and should continue to ramp. Is the card and USD business declining that rapidly? SIMO's previous guidance for cards/USB was to be flat in a modestly declining industry, it seems it is now worse than that.
With gross margins in Q1 41% and in Q2 about 45%, and they are guiding full year gross margins to be about 47%, it means Q3 and Q4 gross margins need to each come in above 50%. That could cause multiple expansion if it actually happens.
SSDs seem to be taking off. It would be good if they could become meaningful
Valuation - my math says they will make about $1.28 in 2013 without LTE success. And full year 2013 revenues will be down about 10% from 2012. So....what's a company with $5 cash per share and $1.28 in EPS worth? Hard to say since revenues are going the wrong direction, but I think $10 will hold.
There isn't any really bad news to explain the weak share price of SIMO this quarter. Samsung's cell phones had a great Q1 again, and Galaxy 4 product launch is just around the corner. The NAND industry in general is doing well, with prices going up due to capacity limitations. SIMO has announced that its 55nm controller is in mass production and this is the product that is expected to drive gross margins higher throughout 2013 as it becomes a larger and larger contributor to revenue. eMMC is generally described as going through the roof in terms of demand. So......how in the world is SIMO sitting at $10.80 rather than $18.80? Friday will hopefully be the start of something good, if they maintain 2013 revenue guidance they can deliver $2.00 EPS in 2013, give them a 10x PE and add back $5 cash, and you have a $25 stock.
the mREIT stocks have often traded above NAV. All the sector needs to trade a premium to NAV is for the net interest margin to expand. It should happens when the Fed slows the quantitative easing program.
The question I have is why did the big funds "move out" of the stock. They gave Q1 guidance and full year on Feb 1st, and the stock rose to $15. Then they confirmed Q1 guidance on April 1st, and the shares fell to $11. It doesn't make a whole lot of sense. The "good part" (hopefully) of the year (the 2nd half) is closer now than it was on Feb 1st, so who would buy in Feb and sell in April? This is a scarier than average report due next week, but if they just maintain 2013 guidance of up 10% to 20% I think it will be hard to have the stock stay this low.
They stopped providing annual guidance in '08 after a miss. The started again I think in Q1 2011. They have already said Q1 will be in line with guidance, so all we can do now is wait until the conference call to see if the selloff has a reason, or not.
Ya got me. The valuation is getting really ridiculous. Yield is almost 6%, and half the market cap is cash. They made $1.73 last year and the traling PE is 6x, or 3x if you deduct cash from the share price. The assumption seems to be that their business is going to contract significantly, but the fundamental news on phones, and Android gadgets says the opposite. It's going to be an interesting Q1 report....
"CEO sees 30% upside in their new growth products"
What does that mean, to see 30% upside? They said the embedded NAND would grow by at least 100% in 2013 and LTE would grow 50%-75% in 2013 based on winning 25% of 2013 LTE unit share at Samsung. What is meant by '30% upside'?
SIMO is presenting today (Tuesday) in Taiwan at a conference. Perhaps they'll say something, but there appears to be no webcast so we may not be able to learn what they say unless it's significant enough to put out a press release.
SIMO said that they don't have much in the way of 2013 design wins for LTE yet. That's just the way it is. Hopefully they will get some as the months progress, but who knows? We gotta just wait and see, or sell and move on. Fortunately LTE is just icing on the cake for SIMO - NAND flash controllers are the bread and butter. No one thinks that business is going away. The valuation now at $13 that SIMO could lose ALL of their LTE revenue, and still be a good buy down here. With FLAT 2013 revenues they should be able to deliver $1,50 in EPS in 2013. Considering they have $5 cash, that means the business is worth only $8. A NAND flash controller business that earns $1.50 in EPS per year is definitely worth $8. So.....if LTE does well, we're going to get a stock over $20 this year. If not, then I really doubt it should go much below $12 unless other problems pop up.
SIMO didn't say that they won't be in the Galaxy s4, they said that their status in Jan 2013 was the same as their status in the Galaxy s3 in Jan 2012, that is, they didn't have any design wins yet. The design wins in 2012 came in Q2 and were mainly for production in Q3. This year they expect the same, they will find out how their LTE sales for 2013 are going to be in Q2 of this year. So......you gotta wait and see....