| From: tktrimbath | 12/31/2012 11:02:34 PM | | | | | | My End of Year Review of GIG
INTRO Here's my semi-annual exercise to see if I remember why I own the stocks I own, and so I can check back and see if their stories have changed. I post in case it helps others too.
GigOptix
GIG (was GGOX) (market cap $0.041B)
GigOptix is a high tech company selling very high rate switches to telecommunications networks. Other applications exist, but predominantly, GigOptix makes and sells those critical components that allow some of the fastest, if not the fastest, switch rates between electrical and optical signals. Someone has to make the switch that lets us download and stream movies with hesitation. It wasn't possible before, but is possible now. They aren't the only ones selling into this market, but they are selling to this market that few except the techies see. Revenues have more than doubled in the last few years. Whatever competition they have isn't enough to pull away all of the market share. The company is quiet with press releases, and when they do announce something it can be hard to understand its significance because of the arcane nature of the technology.
Price to book and price to sales are both below 2, which is a good level for a construction firm, but surprisingly low for high tech electro-optics. My favorite analogy is f5 networks, which languished for many years because their products were aimed at the tech staff of similar companies. Eventually they made enough money that people noticed what they were doing, despite being overshadowed by a major competitor like Cisco.
Their market is growing. They're making money. Their products are relatively new. There is significant potential as word-of-mouth amongst techies (which is probably not word-of-mouth but a series of texts) gets around.
DISCLOSURE LTBH of LMRA since 2004. I'd be interested in buying more if I have discretionary cash (which I don't - let me check my lottery tickets). Unfortunately, I may have to sell if I can't find a job or sell my house.
(I've also collected links to the other discussion boards and my other stocks over on my blog trimbathcreative.wordpress.com . There is also a longer description of history between GIG and me on my blog trimbathcreative.wordpress.com |
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| From: The Ox | 1/10/2013 12:12:46 PM | | | | | | | | GigOptix, Inc. (AMEX: GIG) announced preliminary revenues of approximately $8.0 million, including recognition of approximately $0.9 million of previously unrecognized government contract revenue, for its fourth quarter of fiscal 2012, ended December 31, 2012. This compares with the previous outlook provided on October 30, 2012, that fourth quarter fiscal 2012 revenues would be roughly in-line with third quarter fiscal 2012 revenues of $10.1 million.
*** The Street sees Q4 revs of $10.1 million.
Revenues for fiscal 2012 are expected to be approximately $37 million. This compares with $32.3 million in fiscal 2011, representing a year-over-year increase of approximately 14 percent. The annual increase resulted solely from organic growth as the Company did not enter into any mergers or acquisitions in 2012.
Certain factors that contributed to the lower than expected revenues in the fourth quarter of fiscal 2012 included weaker demand in the markets the Company currently serves, challenging macroeconomic conditions, and a push-out into the first half of 2013 of some anticipated deployments within the Company’s optical product line.
The Company also announced today that it has taken immediate actions to adjust overall spending as it continues to focus on its Adjusted EBITDA1 performance. Selected actions, which became effective today, January 9, 2013, include reducing the Company’s global workforce by about 10 percent, primarily in the Company’s support and administrative functions, and company-wide salary reductions ranging between 5 to 25 percent based on an individual’s salary level.
These actions are expected to result in approximately $450,000 of quarterly cost savings once the plan is fully implemented.
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| To: tktrimbath who wrote (114) | 1/10/2013 12:21:13 PM | | From: The Ox | | | | Even though they are "high tech", GIG's growth rate of 14% is why they are trading at a price to sales below 2....er after this morning's trading down to a P/S of 1.
The push out of new products is also a concern.
However, if you want to own the stock, today is probably a great day to start building more of a position, as the volume in GIG is very low on a daily basis.
(I know you already have a position, so that last statement isn't really directed at you, tkt.)
Before today, the 2013 revenue expectations were for $47 Million. If they can achieve anything like this, the stock looks like a very solid value here at $1.65. Having said this, patience will be required, IMO, and I will assume that it will be very much like watching paint dry for the first part of next year.
Best of luck with the job search and/or selling your house!! |
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| From: tktrimbath | 6/30/2013 6:31:05 PM | | | | | | INTRO Here's my semi-annual exercise to see if I remember why I own the stocks I own, and so I can check back and see if their stories have changed. I post in case it helps others too.
GigOptix
GIG (was GGOX) (market cap was $0.041B is $0.028B)
GigOptix is a tiny company providing a critical element to today's internet infrastructure. They produce incredibly fast high-speed electro-optical switches, the component necessary to take an electrical signal, convert it to light for an optical cable, and then have another switch it back at the other end. The more we stream, the higher the bandwidth requirements, the faster those switches must operate. I don't know of a company that makes faster switches (though they probably exist), especially since GigOptix has finally introduced products using Lumera's organic material technology. High performance, few moving parts, little competition. This should be good. (http://trimbathcreative.wordpress.com/2013/05/15/go-gigoptix-go/)
And yet the stock dropped. Fluctuations are common amongst such small stocks, which may explain the volatility. The price to sales is less than one. I think typical companies should have stocks trading at about a price to sales of six. Technology companies should have higher price to sales. Leading edge technology companies, more so. Companies in growing markets more so again. Companies with little competition, again should have a premium. Even just getting up to a price to sales of six suggests an eight-fold increase in the stock price, and that assumes no sales growth or product launches. Like I said last time: I'd be interested in buying more if I have discretionary cash. Unfortunately, I may have to sell if I can't find a job or sell my house.
DISCLOSURE LTBH of LMRA since 2004.
My finances are strained by similar stories throughout what I thought was a diversified portfolio. My house may go into foreclosure, and additional sacrifices may be made, including selling stocks I'd rather hold, or even buy. So, if I sell, it will probably be because I have to, not because I want to.
(I've also collected links to the other discussion boards and my other stocks over on my blog trimbathcreative.wordpress.com . There is also a longer description of history between GIG and me on my blog trimbathcreative.wordpress.com |
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| From: tktrimbath | 12/31/2013 8:19:12 PM | | | | | | My EOY review of GIG
INTRO Here's my semi-annual exercise to see if I remember why I own the stocks I own, and so I can check back and see if their stories have changed. I post in case it helps others too.
GigOptix
GIG (market cap was $0.028B is $0.033B)
GigOptix makes very high-end electro-optical switches that are key to the ever-increasing bandwidth demands of the Internet and telecommunications industries. I am particularly interested in their highest speed switches, which if I understand correctly, have very few in any moving parts. The products are relatively new but should now have enough time in production environments to sell themselves.
To me, this is similar to the situation the f5 Networks (FFIV) found itself in though arguably in a larger market. F5 makes high-tech communications equipment, but wasn't noticed because it was much smaller than Cisco (CSCO) and advanced enough that it was harder for analysts to understand. FFIV quietly went from under $3 to over $130. After a more than ten-fold increase I sold, and used the profits to make a large down payment on a small house. If I'd help FFIV a few more years, I could probably have bought the house for cash. So it goes. And so it may go for GIG.
My cautions about GIG are that the company doesn't announce much and that the market may not be large enough to create another FFIV story. Yet, the company's Price to Sales ratio is a quarter what it would be for most high-tech innovators, which suggests at least a four-fold possible upside especially considering their increasing revenue. Growth and publicity could encourage a premium.
DISCLOSURE LTBH of LMRA since 2004. (An earlier post includes a description of how GIG came from GGOX which came from LMRA which came from MVIS which came from UW. trimbathcreative.wordpress.com
(I've also collected links to the other discussion boards and my other stocks over on my blog trimbathcreative.wordpress.com |
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| From: tktrimbath | 6/30/2014 8:51:25 PM | | | | | | INTRO Here's my semi-annual exercise to see if I remember why I own the stocks I own, and so I can check back and see if their stories have changed. I post in case it helps others too.
GigOptix
GIG (market cap was $0.033B EOY13 is $0.043B mid14)
GigOptix is a high tech electronics switch manufacturer selling the kind of switches that are rarely noticeable to Internet users, but are necessary for the high bandwidth expectations we inherently have behind streaming video, uploads and downloads measured in seconds, and nearly seamless connectivity. The technology is sophisticated enough that any description begins to use terms like "organic" in ways that have nothing to do with farming. The company is also somewhat of a mini-conglomerate with a long history of mergers and acquisitions despite its market cap. At least on a technical basis, the expansion of the product line seems reasonable.
GigOptix's stock, which is GIG which was GGOX which I acquired from an M&A with LMRA which was a spin-off from MVIS (An earlier post describes the progression. trimbathcreative.wordpress.com trades at price/sales and price/book of less than two. Such low multiples are counter to what I expect from such high tech firms in growing markets. It is possible that the M&A activity continues to confuse the books enough that analysts look elsewhere. It is also highly likely that irregular revenues are also discouraging. Extrapolating the profit (loss) trend into next year suggests profitability, an event which usually draws attention and investor interest. M&A accounting can cloud that improvement.
The upside is that large companies start as small companies, and GigOptix has potential to grow as the market grows and as the bandwidth requirements increase, which increases GigOptix's market niche. Few companies can compete with GigOptix's technology.
The downside is that such a small company may stay small, either from the lack of economies of scale, or from competitive pressures from larger companies with larger sales staffs, or because the company's performance meets or exceeds management's corporate and personal goals. I won't fault a person who is content making over a quarter of a million dollars per year in a fashion that is sustainable, which may describe the CEO. Of course, I want my stock to appreciate and make my life easier, but how many times have we faulted managers for greed that far exceeds a "few" hundred thousand a year. An interesting take on perspective.
DISCLOSURE LTBH of LMRA since 2004. Holding because I have enough shares to positively impact my life, but not so many that I feel too exposed to risk. (I've also collected links to the other discussion boards and my other stocks over on my blog trimbathcreative.wordpress.com |
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| From: tktrimbath | 12/31/2014 7:44:07 PM | | | | | | INTRO Here's my semi-annual exercise to see if I remember why I own the stocks I own, and so I can check back and see if their stories have changed. I post in case it helps others too.
GigOptix
GIG (market cap was $0.043B mid14 is $0.039B EOY14)
GigOptix is a high-tech to the point that a lot of investors in technology don't try to understand it - or buy its stock (GIG), evidently. GigOptix makes very high-speed switches that allow the video streaming and cloud operations that are becoming common. GigOptix's switches include those based on Lumera's technology (a spinoff from MicroVision) using "organic" materials. In this case, organic means using molecules that include carbon, not organic in the farming sense. One of the reasons for the high speed capabilities is that by using the proprietary material, there are fewer, if any, moving parts. There are dozens of applications for the material outside switches, but GigOptix is staying focused on their core business - for now.
Financially, the stock is undervalued compared to other high-tech companies. Most of them are not trading shares at price to sales to price to book ratios near one, as GIG is. Based on conventional valuations, a price to sales of 6 may be more appropriate, suggesting an inherent positive appreciation. The market may, however, be recognizing that GigOptix's growth has not been monotonically increasing. It took a dip in 2013 and may only recover to 2011 levels in their 2014 financial reports. A complicating feature of the company is its history of mergers and acquisitions. While they may be creating an formidable foundation from which to build a much larger firm, they also may be distractions or diversions that make it harder for investors to gain confidence in the core company.
DISCLOSURE LTBH of LMRA since 2004. Holding because I have enough shares to positively impact my life, but not so many that I feel too exposed to risk.
(I've also collected links to the other discussion boards and my other stocks over on my blog trimbathcreative.wordpress.com |
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| From: tktrimbath | 2/10/2015 11:34:50 PM | | | | | | Saw the news yesterday. Yes, the profitability was non-GAAP, but that's still worth celebrating, isn't it? Evidently the market didn't think so.
Here's my blog post about GIG and MVIS and DNDN.
trimbathcreative.wordpress.com
Seems like good news about small companies gets overlooked more easily now. |
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| From: tktrimbath | 6/30/2015 9:59:54 PM | | | | | | My semi-annual review of GIG
INTRO Here's my semi-annual exercise to see if I remember why I own the stocks I own, and so I can check back and see if their stories have changed. I post in case it helps others too.
GigOptix
GIG (market cap was $0.039B EOY14 is $0.055B mid 2015)
GigOptix is a small, specialty electronic company that produces electrical, optical, and electro-optical components that enable very high-speed data transmissions (100GHz) that are required for telecommunications and the Internet. Their highest speed products have few competitors, and their technology has significant advancements that may enable market distinction. Their market is expanding. Conventional competitors may have a difficult time meeting the accelerating need. This provides a good market opportunity for the company.
Despite their advantages, they have yet to establish steady increases in GAAP revenues and profitability. (Thought wait, late breaking news. They expect to announce positive GAAP net income for 2Q15.) They did reach non-GAAP profitability for one quarter. The company continues to merge with and acquire other small firms, which makes the financial statements harder to evaluate. The technology is so advanced that many analysts may also find the company hard to understand. The company is remarkably quiet, and when it does issue press releases, the jargon is hard to decipher. I consider two main possibilities: 1) GigOptix is an uber-tech company and sees no reason to communicate with anyone except the technical people who will buy the product, or 2) GigOptix's goal is to benefit those inside it more primarily and the stockholders secondarily. The company's market cap is about $55,000,000 yet the CEO's salary is about $888,000. More than 1% of the revenues go to the CEO. Nice job if you can get it. Without greater visibility, I must consider both possibilities.
DISCLOSURE LTBH of LMRA, now GIG since 2004. Holding because I have enough shares to positively impact my life, but not so many that I feel too exposed to risk.
(I've also collected links to the other discussion boards and my other stocks over on my blog trimbathcreative.wordpress.com |
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