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Linn Co, LLC Message Board

fish.andchips 4 posts  |  Last Activity: Jul 21, 2014 9:55 AM Member since: Jul 24, 2009
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  • Reply to

    SILC and the Market.....

    by sahmdars Jul 20, 2014 12:31 PM
    fish.andchips fish.andchips Jul 21, 2014 9:55 AM Flag

    As much as we have heard on the board about any doom regarding Silicom, there has been no eveidence of anything wrong with customers and/or products. The company my be guilty of bad timing with their shelf offering and it's explanation and they may not have the best marketing group the in the industry, but they sure know how to develop great products and how to get them if front of the right partners. These partners take a long time to design in products and once they are customers, they are customers for a long time. They become the idea center for Silicom's newest products and the reason sales have expanded at the 25-50% year over year rate. They are not going to switch companies as some have suggested, as they just announced their new product, based on Silicom products' in Q1. This company has a long way to go before sales start slowing down, as 40 Gb will give them a whole new refresh cycle for many years to come.

    Good luck everyone.

    F&C

    Sentiment: Strong Buy

  • Reply to

    quarter guesses.

    by mikthorne Jul 7, 2014 8:15 PM
    fish.andchips fish.andchips Jul 7, 2014 8:49 PM Flag

    From my earlier post:

    I believe that the Q2 sales number will be the same as the (Q4+Q1)/2 were ($25M+$19M=$44M/2=$22M), with earnings between $.75-$.78 per share.

    F&C

    Sentiment: Strong Buy

  • fish.andchips by fish.andchips Jun 16, 2014 9:17 AM Flag

    The year over year growth in the last 4 years for Silicom is as follows:
    2010=48%
    2011=31%
    2012=23%
    2013=51%

    So why have the (few) analysts that have covered the stock forecasted such small growth percentage every year? This is a question I ask every year and this year is no different as Needham’s forecast is for a 12% year over year growth ($2.75 vs. $2.45) for 2014.

    Silicom’s new products are in their infancy and will provide very good potential growth for at least the next 5 years. This in part as they have entered a new market with their data center focused virtualization off load engine and time stamp products. This is very similar to what they did with their bypass product and the networking OEM’s, by getting 1 product engineered into their appliance line, and expanding it from there.

    I need to dissect the Needham numbers. Their forecast for the year is for Silicom to do $87.66M in sales and $2.75/share in earnings. As Silicom has been averaging around 25% net earnings of the last 5 quarters, I think it’s safe to say that they will be close to that this year as opposed to the 22% in Needham’s forecast. That means that at $87.66 M they will earn $3.13/share, not $2.75. This would bring their PE for 2014 to 14.

    I am using a conservative forecast of $91-$93M for (a 25% growth rate) Silicom and earnings of $3.25-$3.32/ share with the Q by Q numbers of:
    Q1= $19m
    Q2=$22M
    Q3=$23M
    Q4=$27M
    Total =$91 x.25=$3.25

    Lastly regarding the analysts, I would give Ken Nagy (at Zacks) a nod as he does a good job explaining what Silicom does, but even his numbers lack the conviction of his writing.

    F&C

    Sentiment: Strong Buy

  • fish.andchips by fish.andchips Jun 15, 2014 8:16 AM Flag

    2009= $20.5M in revenue and $2.2M in earnings vs. Q1 2014 $19 in revenue and $4.8M in earnings- 118% over 2009

    Over the last 5 years Silicom has grown revenue 38% CAGR and earning 69% CAGR and net profits from 10.8% to 25%.

    So why do I bring up these numbers? Because too many posters are looking at the Q over Q numbers without understanding what Silicom is doing, who they sell to and how those customers buy their products.

    Silicom has provided networking hardware primarily to network appliance OEM’s and has slowly expanded their market share since their introduction of their bypass and SETAC products. With their introduction of the Time Stamp, Encryption and Off-Load Engine products, their expansion will continue well into the future. They build and offer products based on their engineering relationships with their customers feedback on what is needed. So new products are not offered as a solution that we think is needed, but as a product that will fill a need at multiple customers.

    When you look at the customers that Silicom sells to, you will better understand the relationship between their Q4 and Q1 sales numbers. Their customers do most of their new product introductions in Q1, which means that they order and build their new Q1 products in Q4. For example, if their largest customer (the one who has products in consignment) thinks they will sell around 9000 widgets based on an aggressive sales forecast (network widget of course) and they pull those out of inventory, but actually only sell 6000, then 2 things happen; they know what their need is for the next quarter (6000) and they still have 3000 widgets in inventory. So guess what, they only pull 3000 out of stock for Q1 requirements. Sales haven’t slowed down; they have just gone through a quarter over quarter adjustment.

    What does this then mean for Q2? I believe that the Q2 sales number will be the same as the Q4+Q1/2 were ($25M+$19M=$44M/2=$22M), with earnings between $.75-$.78 per share.

    For those who

    Sentiment: Strong Buy

LNCO
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