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Hugoton Royalty Trust Message Board

geezer31 26 posts  |  Last Activity: 11 hours ago Member since: Dec 22, 1998
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  • Reply to

    My Math has it as a BAD year

    by arbitrager_z Jul 27, 2015 10:46 PM
    geezer31 geezer31 11 hours ago Flag

    I bought below $4, SIMO is now about $27. I call that creating long term value.

  • It sounds like this time next year SIMO will be an easy to understand way to invest in the SSD technology trend. There are not a lot of "pure plays" in that segment, actually there are not any pure plays left. So if SIMO's SSD controller client market share is #1 at the end of this year, and their SSD enterprise controller market share is heading in a direction similar to their SSD client controller market share, the PE multiple may expand meaningfully.

  • Reply to

    Conference call and share price reaction

    by jiangli21 Jul 28, 2015 10:40 AM
    geezer31 geezer31 Jul 28, 2015 11:28 AM Flag

    In a nutshell, I think the revenue outlook remains pretty good, but the expense growth outlook is pretty awful. Q3 2015 revenues should go up 7.5% from Q2, while Q3 expenses should go up 13% from Q2. Seriously? And expenses are going up another few million in Q4?

    Why don't they shut down LTE and save some costs?

    I hope they're sandbagging Q3 revenues, because they guidance is fairly weak. If eMMC is peaking this year, it should be expected to enter DECLINE next year. And that's the kiss of death. Remember, SIMO is great at sandbagging guidance on the way up, but it is AWFUL at forecasting declines on the way down (remember LTE decline? Remember removable card decline?). Both of those drops were a TOTAL surprise to SIMO. They guided 2013 LTE sales to be up 65% from 2012, and they would not getting a single LTE design win in 2013. If they are going to lose the eMMC business entirely next year, SIMO may not see it coming. That remains a big concern.

    SSDs are gorgeous, and Shannon remains a "show me" story. They say they aren't going to break out Shannon numbers going forward for competitive reasons, so we gotta just hope for the best on that one.

    At least, they should have guided gross margins higher in H2 2015 since all the high market new product stuff is expected to grow as a percent of the mix and the low margin legacy stuff is expected to decline, but I guess this leaves them (hopefully) with a chance surprise on the upside with both revenues and margins if things work out as planned.

  • geezer31 by geezer31 Jul 28, 2015 9:03 AM Flag

    SSDs are likely to be closer to the high end of $45m to $60m in 2015.

    SSDs will grow 50% or more in 2016.

    eMMC will grow in Q3 and Q4.

    LTE is still expected to deliver $12m in 2015 sales.

    Removable cards will decline in Q3 and again in Q4.

    Shannon is expected to grow more than 30% per year for the next few years.

    Growth sounds pretty good. I can't see how the Q3 growth forecast is so low given the inclusion of Shannon sales, the booming growth of SSDs and the expected sequential growth of eMMC. Removable cards really have to collapse badly to keep the Q3 revenue in the forecast target range. Up 10% is not that much off of an $88m base since Shannon will have about $4m of sales in Q3 which were not in Q2.

  • Reply to

    Conf Call is actually optimistic

    by arbitrager_z Jul 28, 2015 8:17 AM
    geezer31 geezer31 Jul 28, 2015 8:52 AM Flag

    It's just math, the growth forecast in the middle of 5%-10% guidance is $6.5m. You have ~$4m acquired due to Shannon, and thus $2.5m for EVERYTHING else. That's all. It's just math. AND they say eMMC will be up and SSDs will be up strongly. It doesn't really add up. It means removable cards are going to plummet. It's great to say its "conservative" guidance, but it's guidance where the math doesn't add up.

  • Reply to

    Conf Call is actually optimistic

    by arbitrager_z Jul 28, 2015 8:17 AM
    geezer31 geezer31 Jul 28, 2015 8:31 AM Flag

    They aren't explaining how Q3 has $4m new from Shannon, strong growth from SSDs, some growth in eMMC, and yet the total number is only going up $6.5m? If everything is going so well, how is the growth so lame?

    They have said the removable storage is declining, so ..... why aren't gross margins going up?

  • Reply to

    My Math has it as a BAD year

    by arbitrager_z Jul 27, 2015 10:46 PM
    geezer31 geezer31 Jul 28, 2015 3:39 AM Flag

    Expenses are ramping faster than sale in Q3, so their operating profit margin should be down even though sales are going up a bit. My full year 2015 EPS number comes out to $2.00.

  • Reply to

    My take on the Q2 press release

    by geezer31 Jul 28, 2015 1:42 AM
    geezer31 geezer31 Jul 28, 2015 1:43 AM Flag

    I meant Q3 revenue growth is anemic. Yahoo should allow us to edit posts!

  • The Bad:
    - Q2 revenue growth is anemic. The revenues are guided up only $6.5m from Q2, and about $4m of that should be from acquired Shannon revenues. So SIMO organic revenue growth in Q3 will be only $2.5m? That's awful. And SSDs are likely growing more than that, so it means the rest of SIMO's business (other than Shannon and SSDs) are DECLINING in seasonally strong Q3. It's awful news.
    - Despite that, expenses are going up $3 million (up 14%) sequentially? What the fork?

    The Good:
    - SSD business is going gangbusters, and should have legs well into 2016.
    - eMMC has a record number of design wins (60)? This is really hard to square with the #$%$ revenue guidance.
    -eMMC and total sales will be up in Q4 from Q3 levels. Up in Q4? Wow, that's good.

    So I think the proper takeaway from this press release is that Q2 and Q3 of 2015 are disappointing, but SIMO's future results are being driven by design win activity and not seasonality. Ok, I guess that makes sense due to their customer concentration in eMMC and the new state of their launches in SSD. So...it's a bit of a bizarre report, but once investors get over the disappointing weak Q3 revenue growth and high Q3 expense growth, the outlook after that is a revenue ramp as new programs kick in. And it seems like the design wins in SSD and eMMC will cause revenue growth in 2016, and for SSD it could be very strong revenue growth in 2016.

    We're looking at record revenue quarters coming up, so even if EPS isn't going up as far as we'd like small cap tech stocks like revenue growth. And it sounds like exiting 2015 in December they are going to have lots of revenue growth levers on the horizon, especially in SSDs. I don't know the fair valuation, but I'll sit around for another 6-12 months to see what happens. It seems the stock deserves at least a 15x PE which would be $30 or more based on 2015 EPS, and probably higher when based on 2016 EPS estimates.

  • geezer31 geezer31 Jul 28, 2015 1:13 AM Flag

    Some of your numbers are wrong.

    They are guiding Q3 revs to be up 7.5% in the middle. That's an increase of $6.5m. Keep in mind they should get about $4m from acquired Shannon sales in Q3 which they didn't have in Q2, so SIMO's organic sequential growth in Q3 will be only $2.5m. That pathetic compared to last year when sales grew 23% in Q3, all organic.

    It seems like SSDs should definitely grow more than $2.5m in Q3, so the rest of the business is declining sequentially. That's really bad considering Q3 should be the best quarter of the year. I think the 60 eMMC design wins don't come on in Q3, they must ramp up starting in Q4. otherwise there's no way to explain how the rest of the business (other than SSDs) is declining in Q3.

    The only "good" think that comes out of this report seems to be that Q2 and Q3 2015 are awful, but then from Q4 2015 on things should be way better than expected with the 60 eMMC design wins kicking in and SSD controller programs scaling up. It sort of means ignore normal seasonality and follow design program ramps?

  • Reply to

    Tomorrow and Stock Sell Off

    by thunderbirds1975 Jul 26, 2015 2:31 PM
    geezer31 geezer31 Jul 27, 2015 11:57 AM Flag

    Your UFS 2.0 forecast is a bit off. Here's what SK said in their press release - According to IHS Technology, the share of UFS in mobile embedded memory will take 4% in this year and grow up to 23% in 2017 and 49% in 2019."

    It seems meaningful to me, although perhaps not as bad as I thought at first.

  • Reply to

    Tomorrow and Stock Sell Off

    by thunderbirds1975 Jul 26, 2015 2:31 PM
    geezer31 geezer31 Jul 27, 2015 11:38 AM Flag

    I'm guessing the just so so Q2 sequential growth was due to LTE declining from about $5m in Q1 to perhaps zero in Q2. With this decline finished, you're left with SSDs, eMMC and legacy removable cards as the drivers. All are entering seasonally strong period, and SSDs should lift the "normal" growth rate of the other two. 15%-20% is a guess, but if I'm correct that LTE declined in Q2 from Q1 and is now not an issue, the SSD hyper growth and the eMMC and card normal growth may get the total growth up to 15%-20%. It is just a guess, but seem reasonable.

    Remember, SSDs grew 100% in Q1 from G4 last year, and they have new OEM programs and also new SSD products (TLC, MLC, PCIe) rolling out every quarter. The SSD growth numbers are what (may) get you up to 15%-20% total sequential growth.

  • Reply to

    Tomorrow and Stock Sell Off

    by thunderbirds1975 Jul 26, 2015 2:31 PM
    geezer31 geezer31 Jul 26, 2015 9:08 PM Flag

    I think the guidance will be strong (up 15%-20% I would guess), and it will have a good affect on the stock price. The main concern for me at the moment is the HK Hynix eMMC business, and whether it will be lost to SK Hynix's UFS 2.0 business which may use an internally developed SK controller and internally developed firmware. SK's eMMC business is too large a percent of sales at SIMO to have it fade away gracefully. Unfortunately, what will really happen with the SK eMMC and SK UFS 2.0 business won't be known (I think) until about Q2 next year. So that's the big concern for me, but I don't think it gets resolved this summer. Hopefully they will discuss it on the call, but until we hear that SK is ordering UFS 2.0 controllers from SIMO it will be something BIG to worry about. As for the results tomorrow, everything near term seems reasonably good, so I would expect a strong report and strong guidance, perhaps pushing the shares up to $31 or so, but it will be hard to get over $35 (I think) until the eMMC vs. UFS 2.0 question is resolved, or SSD explodes to the upside (which is always possible).

  • Ok, the Q2 revenue numbers are just OK, but it's hard to explain why two days after Q2 was pre-announced, SIMO then falls more than $3 in a single day, with no new SIMO related news.

    I think t,he best news that can come out of the Q2 earnings release would be that LTE transceivers sold perhaps $5m in Q1, and went to zero sales in Q2. And there are no new LTE transceiver design wins and probably none in the pipeline, so SIMO will close down the LTE group, take a one time charge in Q3, and after that save $6m per year in LTE expenses. So LTE is dead. But LTE development costs are gone. And what is left is a pure play NAND flash fabless semi company with a great growth outlook.

    If they say that, shorts will burn and SIMO will head up toward $40.

  • geezer31 geezer31 Jul 9, 2015 7:20 AM Flag

    If they don't buy the second ship, they can't cover the dividend. They need the second ship's revenues. They were supposed to buy it in Q3, and then hopefully we would see a pure quarter that covered the dividend in Q4. Not buying the second ship would be a big negative. Maybe the Greek crisis is stopping their banks from providing the loans to buy the ship?

  • I thought they were supposed to exercise the option to purchase the second ship by June, and pay 10% down and the balance on delivery. What happened?

  • geezer31 by geezer31 Jul 7, 2015 8:11 AM Flag

    Almost exactly in line with guidance. I think that's disappointing, but we'll see where the shares go

  • Reply to

    Old fellers

    by mr_chumps Jun 27, 2015 2:30 AM
    geezer31 geezer31 Jun 27, 2015 5:52 PM Flag

    July 8th is my best guess

  • Reply to

    Old fellers

    by mr_chumps Jun 27, 2015 2:30 AM
    geezer31 geezer31 Jun 27, 2015 5:28 AM Flag

    We aren't greedy, we are knowledgeable!

    All the reports I read about MU said that Micron is de-emphasizing PC DRAM and focusing instead on a few other things, a big one of the "other things" being SSDs, and in particular TLC SSDs. TLC SSDs are expected to be 50% of MU SSD bits by the end of the year. Now, who do we think sells MU the TLC SSD controller?

    SIMO to da moon!

  • Reply to

    $50 Plus Next Year?

    by thunderbirds1975 Jun 23, 2015 12:01 AM
    geezer31 geezer31 Jun 23, 2015 2:12 AM Flag

    $450m is a bit of a stretch. That would be an average of $112m per Q or so. Doubt that's a reasonable assumption. But maybe, who knows? If that Chinese storage system acquisition takes off, and eMMC doesn't collapse, I guess it's possible. And if they get to $450m in 2016 revenues I would expect the gross margin to be closer to 30% than 25%. So your price target is TOO LOW! Urp, Bartender, another beer please!

HGT
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