Prior to earnings I was concerned about guidance for this Q2 as street estimates seemed a bit high. I thought FF delivered a solid qtr and very good guidance. Q2 & Q3 are seasonally the strongest quarters. Management stated that Q1sometimes Q2 is stronger than Q34 and sometimes Q3 is stronger than Q2. This year they said Q3 will be stronger. There is absolutely no reason for FORM not to be solid in black for Q3.
Profitability is on the horizon, 1Qtr away.
They are in the largest 2 markets Mexico and Brazil.
When G3 network is fully deployed (end of this year), they will generate tons of cash the same way they have done in the past. Until now they have been competing with one hand tied behind their back.
while stock price has retreated, I see no excuse for FF to have anything but strong qtr. On the traditional side of the business, DRAM prices have been strong as evident by Micron's recent report and also the performance of stocks like WDC and STX. Furthermore, Q1 & Q2 are the strongest quarters for the traditional side of business. Mobile and Server DRAM have been strong. The MP side of business has no cyclicality. It is strong across the board with clients like Samsung, Apple, QCOM etc.
FF has no excuse but to report a strong Qtr IMHO.
but that shouldn't matter. Most of FF DRAM business is from Mobile and Server DRAM used in cloud computing. IF DRAM price stability was good for Micron then it should be no excuse for FF.
When will the transformational deal of MP translate into meaningful inflection point in business.
Re:spike in DRAM prices had little to do with demand
Whatever demand is out there it is at higher margins which is a good thing especially for FF still having big chunk of revenue from DRAM.
Short % of Float (as of Mar 15, 2013)3: 30.10%
The last 3-4 days before last earnings report, shorts were leaning on the stock even in good tape relentlessly until they got their butt kicked big time for 18% rise after CIEN reported.
Shorts are freaky animals, they keep on making the same mistake. Short interest as of 3/15 is 30%. This is nothing more than shorts leaning on the stock again and trying to cover fromthe lowest base possible.
Supposedly they brought in this new management team to fix the old management mess. 3 years into the job and they continue to burn more cash each and every Qtr. When this management took over they had more than $340M in cash, after tis Qtr they will barely have $150M+.
Management has lousy timing. When everyone was focused on smart devices (iphone, iPads), FORM was beefing up it's DRAM presence even though all evidence was pointing to slowing PC sector which proves they are out of touch with their customers and the rest of technology world.Then they acquire MP, which would have been much better acquisition 2-3 years ago, instead of putting themselves on the auction block. Management team is in denial and full of arrogance. They think they can fix this business model believing and quoting industry growth research. Even if they manage to break even 3-4 Qtrs from now, it will take forever for this company to recover a fraction of the cash burned since 2008 (in 2008 they had $500M+ in cash).
Few years ago there were 7 BIG players in DRAM, today there are only 3-DRAM makers left. When things seems to improve in DRAM due to fewer players, FORM is scaling back in DRAM. They were initially targeting 65% of DRAM sector, but last Qtr they want this scaled down to 40%+.
The irony in all this is the Chairman of the board is the old CEO who screwed up this company by allowing Korean competion steal their DRAM business. The rest of the board members are all Silicon Valley dinosaurs. BOD is absolutely clueless and is in no position to force this management to stop burning more cash and sell the freaking company.
My feeling is management is content with status quo burning more cash each Qtr while taking good paycheck and awarding themselves with $2-3M in stock based compensation each Qtr. In the end Management will waste most of the remaining cash by experimenting with different business model until they finally get ousted. By then there will not be much value left.
Management is full of hype with their transformational message but they are full of fluff when it comes to producing results.
This very management team had promissed break even by mid 2011. 2 years later and they are still expected to burn another $15M this Qtr with no end in sight.
everyday that shorts wake up to find there is no news, they play the same game.
The problem is these are BIG players with deep pockets. They pressure the ASK and buy on the BID. If you take out the ASK they take the stock lower. This is great strategy to cover at lowest price possible.
All this is made possible in absence of company news or analyst commentary.
there is 54M shares short and they refuse to cover higher, so they keep sitting heavily on the ask while buying on the bid. It amazes me that people end up selling to them at the BID while they cover.
This has been their strategy every day especially in absence of any corporate news.