Seems the single analyst whose estimates are posted on Yahoo Analyst Estimates were recently decreased significantly to show larger losses.
What is behind this? Does anyone know which analyst this was?
The numbers on the Analyst Opinion hasn't changed (2.0 on a 1=Strong Buy; 5=Strong Sell) and the price target still shows $7. But the single analyst whose estimates are on the Analyst Estimates page sure do not tell a good future......if these are correct.
I do not have a position in VUZI but have been watching it for a possible investment. This latest data concerns me and I would sure like to know more about it. Anyone have any insight..........especially the analyst report?
From Yahoo's Analyst Estimates, the average of 7 analysts are:
3Q 2015: Revenue of $92 million and EPS of $0.31 (compare to $32.5 million and $0.04)
4Q 2015: Revenue of $90 million and EPS or $0.28 (compare to $32.5 million and $0.05)
2H 2015 is $182 million and $0.59/share compared to $65 million and $0.09 EPS
And, as these include the recent merger, the revenue comparisons are nearly 200% increases and huge percentage increases in EPS.
The key will be to keep growing revenue and earnings by 15%/year after a full year of the merger so it can justify a 15 P/E and thus a $16.50 or more in 2016 (which is in the range of listed price targets).
I recall that from the recent CC. Here is the 2H 2015 guidance from their 6/8/2015 PR:
Revenue is expected to be between $175 million and $185 million for the second half 2015.
GAAP and non-GAAP gross margin in the second half 2015 are expected to be approximately 50.5 percent and 55.5 percent, respectively, +/- 2 percent.
GAAP and non-GAAP operating expenses for the second half 2015 are expected to be $100 million and $64 million, respectively.
GAAP and non-GAAP income/(loss) from operations for the second half of 2015 are expected to be a loss of $9 million and income of $36 million, respectively.
Basic and fully-diluted weighted average shares outstanding are expected to be 60.5 million and 62.5 million, respectively.
Probably a good amount of this is with the overall market recovery but there may be some buying by:
+ Those wanting to get in ahead of the MXL Presentation at the 9/17/15 Invdestor's Conference in Las Vegas
+ Those discovering the stock which is trading more than 50% below the low price target
+ Those seeing EPS estimates increasing for 3Q 2015 (from guidance) and 4Q 2015 (not guided at recent CC)
I would be intersted in any educated opinion on MXL which I started buying this week.
Go to the Yahoo Finance page for MXL and see the chart, the key statistics, the price targets and the rising EPS estimates.
Of note is that George Soros owns over 5% of the company and insiders are just shy of 10%.
Total maket cap is just under $600 million with a forward P/E under 9 and PEG of 0.54.
Out of respect for this board, I suggest any comments on MXL be posted on that Message Board.
The MSFT on biometrics would be on the Surface and Surface Pro devices which are supposed to be doing quite well.
I personally think Apple is a bit negligent not supporting Adobe products as many do still prefer PhotoShop and other Adobe software over their Apple Mac equivalents and thus own a Windows device.
The big security improvement in Windows 10 is biometrics........and I have to say I am ready for a facial or iris scanner rather than the many passwords I need for the many accounts that seem to be ever expanding.
But, whatever MSFT uses in the Surface and Surface Pro could then be adopted for use by any one of the many desktop/laptop/tablet manufacturers such as HIMX customer Levovo who is the larges seller of Windows laptops.
I suspect the favored method would be to use the embedded camera and wonder what needs to be special about it for the purpose of facial, iris and/or fingerprint recognition (resolution, depth sensing, etc.). This aspect could really help HIMX's CMOS sales.
Thanks again glhsken,
While your comments on margin pressure are valid, I think it is your comment on 3Q having the options and grant expense of $0.06 which is causing the drop in EPS guidance. The margin pressure is a constant.
So, this brings me to the next question: Was EPS guidance GAAP or non-GAAP as the options and grant expenses seem to be in GAAP but not non-GAAP.
I will have to look closer at the balance sheets and then listen a bit better. But, I do appreciate your explanation as I have lots to learn on accounting.
So, is it correct that the inventory is thus increased by the tangible amount 'invested (direct expenses in manufacturing or cost of good sold) in these...........which is then offset by the costs so there is a net $0 impact? Then, when items are sold from inventory, the differnce between the selling price and the tangible amount becomes profit/loss (with indirect 'costs and depreciation already taken and thus not applicable)?.
So, now that you 'discounted' my explanation of why revenues will are not dropping much for 3Q but EPS (and thus margins) are, what is your undersanding of why this is occurring?
I agree and am serious that you should take 5 minutes and send a quick email to HIMX (Jackie who does publish her email address on some PR's) mentioning this and:
+ Inquire about their involvement
+ Ask if they have done a quick market analysis on the potential and how their current state of R&D would apply
Would enjoying sharing a drink and discussing this further.
I am an Engineer who understand finance but not accounting rules. My take is that what you mention is more balance sheet issue where value is somewhat maintained with manufacturing in one quarter and placed into investory for later sales.
But, on cash flow (profits and EPS), they start by reporting revenes and then deduct expenses. Change in inventory doesn't factor into cahs flow or EPS.
As such, manufacturing LCOS now and placing it into investory for later sales would greatly impact EPS but not shareholder equity which is a balance sheet item. Then, sellling them in a later quarter with the associated expense already deducted would mean larger margins and profits....in that quarter.
Anyone is free to correct me where I am wrong.
Sorry but no. I recall you mentioning this before and me doing some research on it. A very promising field and I think very worthy of HIMX R&D.........but I have no idea if this is on their radar.
When one considers the huge growth in internet traffic caused by increasing video traffic and then future 8k HDTV's and the decline of cable in favor of internet feeds, this is absolutely something that would be huge.
I don't know what other companies are really working on this but would suspect CSCO and others.......but I don't really know.
You shoud write an email to HIMX Investor Relations inquiring about this........and even suggesting that HIMX do a quick market analysis as this could be huge and HIMX brings a much different skill set to this potential than the CSCO's and others of their ilk.
Hey wywiseman1 & glhsken,
I also found these Q&A's very insightful........and more so than the Q&A from Conference Calls.
I also found these bullish on several fronts as it discusses why LCOS is the leader in AR.......and reitereates how they are well ahead of their competition along with their TDDI product leadership and promise.
It was also interesting to read that they are in talks with Microsoft on facial recognition (Windows 10 biometric security) as this could follow Microsoft's high satisfaction with similar components in Hololens.
The comments about how there used to be many chip companies but now fewer were intersting when Wu talked about how they ensure their R&D is serious and taken seriously by their customers........but having their customers share the R&D costs.
Having written this, there are several questions I have which were not asked (how many techs were hired this year and what ar the doing now? Are 3Q margins low as they are manufacturing LCOS for later 4Q 2015 and 1Q 2016 sales (cost in 3Q but revenue in later quarters). What is the current LCOS capacity and what can be done to increase this until new fab plant is completed......and when will the new fab plant be started., etc.).
Really interesting. I would post some of this but am on my iPad which doesn't do cut and paste well from pdf's.
I agree and have started to build a position in MXL (sold some Puts, bought some Call Options).
While what you write is all true and positive, it doesn't address the lack of guidance for 4Q as Mgmt hedged when asked during the 2Q 2015 Conference Call. While I can agree that today's market environment does make it hard to predict 4Q activity, they did previoulsy give 2H 2015 guidance in a June 2015 update.
Another factor is that 2Q had an overall loss.......due to several factors including the closing of their purchase even though they had good earnings non-GAAP (but a penny shy of estimates).
Overall, MXL seems undervalued........but they will have to show hedge fund managers that they can turn an overall profit and grow the business..........in an uncertain world economy.
To me, the bigger question is how the uncoupling of traditional cable/satellite packages affect MXL along with the migration to the internet for Netflix, Hulu, etc. as these do not require set top boxes. In a decade, we may be getting all our 'TV' entertainment over the internet with ala carte pricing meaning the set top boxes go obsolete and we 'change channels' by selecting a new website on our smart TV's. Thus, MXL needs to work on the streaming and buffering portions of their business.
My take is that Wu used inflection point to indicate an accelerating change in the ramp profile.
I did not see any real comments on the numbers I suggested for LCOS/WLO this weekend or what questions the analysts missed which could have been revealing.
Besides the estimates, I mentioned that HMX could be manufacturing these..........and storing them due to limited manufacturing capacity knowing that when the orders come, they will come in faster then they can turn these out.
This also makes sense when you consider:
+ They have hired ~230 techs which seem to be for this plant (or what else are they doing?)
+ Helps explain why they are forecasting a loss for 3Q2015.......as they have to pay manufacturing costs but get no revenue.
=== Why else would earnings drop so much on very little change in revenue???
This sceario also fits the inflection point comments while not forecasting any revenue increase for 3Q. Hopefully we see lots of LCOS revenue for 4Q 2015 as they sell many of these 'inventory' LCOS/WLO's.
That is $25/display or $50 for two in a single HMD for Hololens (wonder if Google will go to two also??). I was a bit sloppy with my writing but if you check my math, it is based upon $25/display.
What I also missed is that there are probably other items HIMX could be sellilng associated with the LCOS in HMD's such as drivers, controllers (perhaps including an HPU or holographic processing unit), etc., etc.
So, perhaps you can increase everything I wrote by 20% for the additional items ($10/HMD based upon $50/HMD for two displays).
With the current LCOS/WLO facility rated for 300,0000//month, tthat is:
+ 900,000 units quarter (450,000 units per quarter at 2 displays per HMD)
+ $22.5 milion per quarter at $25/unit (from old Google Glass estimated bill of goods)
+ $7.74 million profit at 34.4% net margin (picked for rounding but should be in the 'ballpark')
+ $0.045 EPS per quarter or $0.18 EPS/year at 172 million shares
+ $2.70 increase in share price at 15 P/E (or ~38% increase in share price from $7.08 close)
+ $0.135 dividend increase associated with 75% of this EPS (additional 1.9% dividend from $7.08 close)
I am a bit surprised an analyst did not ask about employment and staffing levels for the existing facility but I have to guess that is what the newly hired people are doing (training/operating with first batch and then prepping for 24/7 operation with the second batch). I am also surprised that someone did not ask about the critical path for ramping up (space, building, machinery, people, etc.)
I would also expect that HIMX starts manufacturing and storing these in inventory so they have plenty to ship when the time comes.........so the first quarter of shipment would be mich higher than what I show above as they sell the saved up inventory. In fact, I am surprised some analyst did not ask about this.........as it could be the reason the margin is so low in this 3rd quarter.........they are eating the expense of manufacturing and stocking these units in preparation for later shipment due to the 300,000/month run rate.
Note that they said they buy and manufacture some of the equipment. Makes one wonder why they can't farm some of this out........but it is probably IP related (don't want secrets getting out).
What would you suppose these emmployees are needed for? And, how many do you suspect HIMX is wanting?
As for finding qualifed employees, isn't that the type of problem most companies would want to have........as it certainly should mean a larger and sustained order?
This week depends upon other factors including Revenue, Earnings, Conf Call & guidance....although these are somewhat related.
It also depends upon who else is buying the products (mostly LCoS?) that will be manufactured by the additional 100 techs you seem so worried about if HIMX can find/hire. So, if this is not for Microsoft Hololens, who & what do you think these people are needed for?
Nadella had said Hololens would be released around the time of Windows 10...and perhaps there are two releases planned....Enterprise first who will write/work with the specialist vendor to write the specialist software and then the consumer edition after developers write software
Or, do you prefer not to discuss but to mock?
From the article:
Microsoft will release "V1" of its HoloLens virtual reality headset sooner rather than later. CEO Satya Nadella said that the first developer version of the hologram-projecting device will come out "within the next year" during a video interview with the BBC this week. He added that V1 will be focused "more around developers and enterprises," and he noted that HoloLens itself has been "a five year journey" journey for the company. While we're closer to the end than the beginning of that journey, we're guessing it will be quite some time before you can order a HoloLens..
Nevertheless, Nadella's remarks do give us our best sense yet of how and when HoloLens will leave Microsoft's labs and become a shippable product. Earlier this year, Nadella tempered expectations that HoloLens would be a major gaming product when released. He told ZDNet, "I want us to push a lot more of the enterprise usage ... In general Microsoft's approach will be always this dual-use focus, or this multi-focus. What we can uniquely do is bridge consumer to enterprise. That's in our DNA." Nadella built on those comments in this week's BBC interview, adding that "We will have developer versions of it first and then it will be more commercial use cases and it will evo
Continuing to conduct my due dliigence on MXL and am surprised at the lower valuations here; P/E and especially PEG. MXL basically preannounced their 2Q 2015 numbers which will be reported on 8/10/2015 and gave updated guidance on 2H 2015.
Everything looks good according to the PR giving this data with non-GAAP EPS rising nicely and GAAP EPS getting near profitability. The share count is increasing but I think that has to do with convertible warrants from either or both MLX and their recent acquisition Entropic.
Does anyone here have a better handle on how/why the share count is expected to go from 54.7 million fully diluted shares to 62.5 million at the end of 2015.........and is there additional dilution coming due to outstanding warrants and commitments?
I am considering the following investment scenarios:
+ Buy shares and go long
+ Buy shares and sell future call options for income, downside risk mitigation and overall 'fixed' ROI
+ Sell future puts (bullish play) for either a lower buy-in price or just the option premium depending upon which strike price I sell