Today, O2Micro (NASDAQ:OIIM) announced that it expects to report record revenues in the range of $22 million for Q3 2020. It had previously given guidance of revenues between $17.6 and $19.0 million or a midpoint of $18.3 million, which would have been growth of 14% year over year. $22 million is growth of 37% year over year. If expenses stay in the range of its previous guidance, EPS for Q3 could be a non-GAAP $0.12 per share.
As a result, we are raising estimates for Q3 and Q4 and thus the year. Q4 revenues for O2Micro are typically similar to Q3, but we remain cautious. For 2020, we are now expecting revenues of $75 million and a non-GAAP EPS of $0.17.
Were we to use the current average enterprise value to trailing twelve-month sales of 8.5 times of other fabless semiconductor companies and apply it to OIIM’s trailing 12-month $66.8 million revenues, we would calculate an enterprise value of $566 million. Adding to it $41.4 million in cash and equivalents gives us a market cap of $607 million or $21.90 per share. We believe that once the company shows sustainable revenue growth and cash generation, the market should afford it a valuation closer to this price. It is certainly on the path to do this.
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