The only headwind I see for SWKS is from the derivative effect of the strong dollar impacting mid to low tier smartphone sales in the EM countries. Otherwise I am not aware of anything that changes the story. It seems to me the potential impact to the top/bottom lines has been priced in, maybe overly so. All things equal my guess is they walk it up in to the upper $90's pre earnings and then it's about the guide. The wildcard being a potential bump from a divi increase announcement.
I'm going to refrain from replying with the insult you so richly deserve and simply say the obvious, you do not know what you are talking about. BTW, you're now on ignore.
Speaking of Apple, with a positive note out from Citi on potential iPhone sales I am a little surprised SWKS is struggling today. I guess nobody is going to get too brave until we hear about guidance in light of currency/smartphone sales sluggishness in China.
"Morgan Stanley’s Apple analyst, Katy Huberty, tracks institutional ownership of large cap technology stocks. In her most recent analysis of 11 technology stocks owned by the top 100 institutional shareholders Apple is significantly under-owned and is only one of two, Microsoft being the other, that is under-owned. "
I guess the short answer would have been SUNE/TERP are still in "show me" mode. Once SUNE's cash flow generation begins to de-lever the balance sheet, and once TERP's dividend is established to be much higher based on not just the call rights list but the actual drop downs, I believe the "street" will have greater confidence in the combined model. Because the information is definitely out there for everyone to see. So if a schmoe like me can figure it out it isn't that this is a mystery to anyone paying attention. It's a matter of perceived execution risk..........which will diminish over time.
Fair question. First, let me answer your question with one of my own which dispells the notion the "market" is as smart as your question implies. There is pretty much zero correlation between the price of oil and demand for solar/wind powered electrical generation. So why did short interest in all the solar stocks rise, and the prices of solar stocks decline, when oil prices dropped?
Second, you will find virtually nothing that is speculative about what I wrote in the first piece of this thread. These aren't pie in the sky numbers I'm using. If anything they are conservative as shown by just how much that is in the pipeline for SUNE they intentionally left out of their guidance so as not to over promise and under deliver. If you have the time listen to TERP's last conf. call. At one point an analyst asks the CEO, in so many words, why they have not raised the dividend guidance when the 3.3 GW's of call rights projects SUNE has committed to TERP makes it obvious TERP's divi guidance is too low. The CEO answers, "you've got it," indicating the analyst is correct to think guidance is low but goes on to say they will raise guidance in a boring, mechanical fashion when they feel it is warranted. Lastly, SUNE is still at the beginning of its growth phase and is not yet generating the kind of FCF it will in 9-18 months. TERP is in its infancy having only been IPO'd about 9 months ago. So from an operational standpoint neither has a long term track record of performance. Also, consider that some of the "smart money," namely a number of high profile hedge fund managers, HAVE figured it out. So has most of the analyst community, one of which (Avondale) just put a $35 PT on the stock. I think we are going to see PT's raised across the board. Anyway, that's my opinion on your question.
The street is fractionally ahead of this quarter's guidance so there is still room for a beat. Guidance for Q3 is what will move the stock, as always.
"China makes big cut in bank reserve requirement to fight slowdown"
That MIGHT somewhat mitigate the expected sell off on Sunday from the government's attempts to take speculative froth out of the market.
Anybody who has followed my posts knows I have attempted, more than once, to quantify what the near future looks like in terms of how fast TERP will get to the IDR high split. Something that has tremendous implications for cash flows coming to SUNE and consequently SUNE's share price.
In pursuit of understanding what they are guiding for you can't do better than watching the slide presentation and simultaneously listening to the audio of pages 73-83, with specific focus on page 82.
For context understand that TERP's current operating portfolio contains 1.5 GW's with a guided increase, in order to achieve the $1.30 guided dividend, of 400 MW's. Based on the aforementioned numbers the CAFD guide is $214M. (They just added 521 MW's from the Atlantic acquisition that were not included in the guide).
Getting back to page 82, which summarizes SUNE's expected performance for 2015, they plan to retain approx. 1.9 GW's of the approx. 2.2 GW's they will develop. The unlevered CAFD generated from those MW's is expected to be $275-325M. While that estimate does not account for TERP's future share issuance it is twice the current CAFD being generated by TERP exclusive of the $44M in CAFD the Atlantic assets will generate. At this time you should pause to consider the implications of what I have just written.
During the presentation SUNE's CFO said they expect to reach the IDR high split by the end of 2016, BASED ON the numbers TERP has guided for. The $275-325M of unlevered CAFD coming from retained projects in 2015 make TERP's guidance a complete joke even with an impending share issuance.
The investment community is going to have another chance to see this stuff laid out for them during the Q1 report in May. I suspect PT's for SUNE will be increased previous to and or following the report.
David Aldrich - Chairman and CEO
Yes, I think it’s both. It is clearly the case that the shift from mobile to broad market in Q2 was helping moderate some seasonality. If your company was focused purely on mobile, purely on high-end mobile you’d see far more seasonality that we are able to see.
Craig Ellis - B. Riley Caris
That’s helpful and then I just wanted to clarify a related comment that you had, you indicated that broad market strength is helping to offset seasonality, was that pointedly at the current quarters outlook or is that longer term should we expect to see a year from now relative to historic patterns, a little less seasonality from the December quarter into the March quarter?
Cody Acree - Ascendiant Capital
Thanks for taking my questions and congratulations guys. Maybe if we can look at a split of revenue to the best you can, the details that you can give us on handset versus non-handset, obviously the March quarter is much better than seasonal and to the extent maybe you can give us a mix split that is helping to drive that?
David J. Aldrich - Chairman and CEO
Well, I think clearly December marked a high point in terms of the amount of mobile revenue you see because obviously that is where you see the big programs ramping. Our March guidance is to be much less than seasonal so we expect a strong March quarter and that will be driven by a lot of broad market activity. There will be some mobile phones launching but in general the outperformance there is broad market based. You will see a reduction in mobile volume and an increase in broad market vertical markets. Within mobile, where we are seeing by far the greatest strength is in these integrated system solutions, the power amplified duplexers, SkyOne, WiFi based products, power management and the like so I hope that answers your question.
Now for our second quarter business outlook, we expect second quarter revenue to be $750 million representing 56% year-over-year top line growth and significantly better than normal seasonality. At this revenue level we suggest modeling gross margin in the range of 46% to 46.5% with operating expenses of approximately $95.5 million. Online we anticipate 100,000 in expenses of interest income and other expenses and a cash tax rate around 13.5%. We project our tax rate to remain at these levels for the remainder of our 2015 fiscal year. We expect the share count to be around 194.5 million shares resulting in second quarter EPS of $1.12.
Here is a small amount of color on the call........
"TerraForm price target raised to $45 from $40 at JPMorgan
JPMorgan raised its price target for TerraForm to $45 saying the company is executing well on its pipeline and that recent acquisitions could drive medium-term upside to estimates. It recommends looking for pullbacks to get into the name and keeps an Overweight rating on the stock."
It certainly can't hurt from a PR perspective but I don't think it makes a material difference to the business or the stock.
But while we are on the subject of finances I do want to remind everyone that during the CMD presentation they spoke about "flexing up" the warehouse facility. Saying they were looking at ways to do it as the business scales up. So as building out GW's at a higher and higher annual run rate requires more capital they will have it at their disposal as needed.
Today's action is indicative of the kind of trading that has plagued the stock all the way up to yesterday's high from the low $20's just a few months ago. Namely, weak hands. The up days see short covering bursts when the stock will jump $0.20-0.40 in just a few minutes followed by the shorts coming off the bid with the stock sinking back down. I think it's because of a lack of conviction buying by institutional money intent on holding for the inevitable climb over $40 and from hot retail money persuaded to enter the stock based on headlines. Not to mention to large hedge fund ownership who are reliably unreliable as they constantly seek to move in and out of the stock de jure.
It may still be a quarter or two away from large institutions taking positions since the real cash flow generation will not be truly visible until they report Q2-3 results. By then we will have more clarity on the EM yieldco and on TERP's updated divi guide. Once the tute money begins to pile in short interest will drop putting $35-40 in play within the next 9-12 months.
I'd love to see a detailed explanation for why you believe that would be. I'd love a good laugh before I put you back on ignore.
But don't you think the dollar strengthens with lower interest rates/currency devaluation going on pretty much everywhere while we are looking at an eventual (probably fall) rate increase?