Technology StocksSilicon Motion Inc. (SIMO)

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From: Elroy10/6/2017 12:17:35 PM
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TAIPEI, Taiwan and MILPITAS, Calif., Oct. 06, 2017 (GLOBE NEWSWIRE) -- Silicon Motion Technology Corporation ( SIMO) (“Silicon Motion” or the “Company”), a global leader in designing and marketing NAND flash controllers for solid state storage devices, announces that based on its preliminary third quarter financial results, revenue is expected to be within the upper half of the original guidance range of $122 million to $129 million that the company issued on August 1, 2017. Gross margin (non-GAAP) is expected to be near the midpoint of the company's original guidance range of 45.0% to 47.0%.

The Company will release its third quarter 2017 financial results after the market closes on October 26, 2017 and will host a conference call on October 27, at 8 am Eastern Time.

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From: Elroy10/6/2017 12:27:49 PM
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There's nothing special in today's SIMO pre-announcement, but I think others are with me on the view that the just completed Q3 is the bottom for this part of the NAND memory cycle, and from here on out we're over the hill and starting to get production ramps which means controller and revenue ramps for SIMO.

Long SIMO and short the NAND makers seems a good position to be in for the next 12-24 months, we shall see...

SIMO train leaving the station....

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From: Elroy10/6/2017 11:08:12 PM
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SIMO investors seem to like the idea that the fundamental low quarter may be in, and the future looks up from here. By how much, who knows, but if SIMO can just keep it's current design slots it seems like the last four quarters of headwind should turn into a nice tailwind for SIMO. The 2D to 3D NAND transition is at least a year on for most of the NAND makers, and they all should be ramping higher yield production with higher layer count 3D NAND for the next 18 months, and maybe more. And then we'll see if the Chinese will actually be able to make some NAND chips that they can sell, if so those new NAND chips need controllers.

SIMO announced a $200m share repurchase when they did their Q2 conference call at the end of July 2017. I wonder how much they've bought? Perhaps not much. SIMO was $41 when they made the Q2 announcement, lowered expectations for Q3, and announced the buy back. They probably expected the shares to decline due to the weak Q3 revenues guidance, but instead the shares went up to $44 the next day, hovered around $42.50 for a few weeks, and are now $51. They were probably thinking it would be a good idea to buy some stock in the $30's since they expect good things in 2018. It never got there. We'll see. They don't really need to buy shares to support the stock price since the stock has risen on it's own without any unexpected good news. I'd rather have them bump up the dividend than buy back shares if the stock is doing well on it's own without their buyback support. I want the dividend cash for myself!

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From: Elroy10/9/2017 8:20:12 PM
   of 1928
Last year in October.....

On October 24th SIMO announced an increase in it's quarterly dividend from 15 cents to 20 cents, for each of the next four quarters. Then they announced Q3 results on October 28th.

So.....we may get a dividend increase announcement around October 23rd.

I wonder what SIMO has done in regard to their $200 million share buyback announced about August 1st this year? They've had 2 months to buy back some stock, so if they are going to do it steadily with equal amounts purchased each month, they might have bought back up to $33 million of stock, about 800,000 shares.

But I recall a presentation they made in September at a conference, maybe the Citibank conference. They said that the trigger to buy back stock is near the 52 week low, and it hasn't been that low since the buyback announcement. Maybe they've bought back zero. I wouldn't mind, I'd rather have them increase the dividend than buy back shares. The shares are doing fine without them buying it back themselves, so let them hang on to their cash. If 2018 does have a revenue rebound as expected, I think they'll generate a ton of cash (probably more than $100 million) in the year. I'd love to see them bump the dividend up to 30 cents per Q, and say the share repurchase is still in place but they don't feel the need to buy back shares while the stock is doing a good job of going up in price on it's own.

It seems like SIMO has tailwinds on the horizon, now we just got to hope for no unexpected bad news. If things just go along normally, and SIMO keeps it's design slots it seems like it should just continue to float upward until the next downturn in NAND which is expected, I don't know, a few years from now.....

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From: Sultan10/10/2017 1:21:29 AM
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Loop Capital Raises Silicon Motion Technology Corporation (SIMO) Price Target to $59.00

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From: Elroy10/11/2017 9:55:29 PM
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SIMO short position declined from about 3.9 million shares on 9/15 to about 3.3 million shares on 9/30.

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From: Elroy10/14/2017 6:04:43 AM
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Ali Baba is SIMO's main Shannon customer.....

Alibaba says it will invest more than $15 billion over three years in global research program

Alibaba announced it will invest more than $15 billion over the next three years in a global research and development program

As part of the program, Alibaba will set up research labs in China, the United States, Russia, Israel and Singapore

The labs will conduct research in areas such as data intelligence, Internet of Things, financial technology, quantum computing and human-machine interaction

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From: Elroy10/16/2017 7:41:27 AM
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Toshiba reportedly suspends NAND flash production in Japan

Josephine Lien, Taipei; Jessie Shen, DIGITIMES [Monday 16 October 2017]

Toshiba recently suspended NAND flash production at its Japan facilities for a few weeks due to ransomware attacks on its computer network, according to sources at channel distributors. The incident could tighten global NAND flash supply.

Toshiba decided to shut down the production for 3-6 weeks to deal with the hacking, but production has now returned to normal, said the sources, adding that the suspension resulted in reduced NAND flash production nearly 100,000 wafers.

The world's NAND flash market was supposed to see improvements to the undersupply situation starting the fourth quarter, but the Toshiba fab shutdown has now created uncertainties, the sources indicated.

Demand for NAND flash chips has been driven by an increase in the average memory content in smartphones and server market growth, while growth in the supply has been constrained by chipmakers' slower-than-expected transition to 3D technology. The global supply of NAND flash memory fell short of demand in the latter half of 2016, and has remained tight since.

Nevertheless, end-market demand is actually not as strong as expected, and the NAND flash price rally has gone out of proportion, unable to reflect the real market demand, the sources said. Channel distributors have become reluctant to place orders as the consumption of end-market devices, such as SSDs, is being discouraged by their high prices. The price hikes already started to show adverse impact on demand at the end of the second quarter, the sources noted.

Many downstream distributors originally believed that NAND flash prices had been inflating excessively and would see correction starting the fourth quarter of 2017, according to the sources. However, with the Toshiba incident, such a price correction may not occur.

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From: Elroy10/17/2017 12:53:15 AM
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And in response to yesterday's report in Digitimes (the previous post on this board).....


TrendForce Maintains 4Q17 NAND Flash Market Outlook After Finding Toshiba’s Capacity Remains Largely Intact Despite Rumors

Despite lower-than-expected output caused by certain problems in production lines, Toshiba will be able to deliver its NAND Flash shipments as per the dates and volumes in its fourth-quarter contracts, says DRAMeXchange, a division of TrendForce. After confirming with sources, DRAMeXchange refutes a report alleging that Toshiba’s monthly NAND Flash capacity has been reduced by nearly 100,000 wafers and some of its production lines have been suspended.

Alan Chen, senior research manager at DRAMeXchange, stated that Toshiba’s production trouble will not have a major effect on the overall NAND Flash supply and demand in the fourth quarter of 2017 and in the first quarter of 2018. As for the NAND Flash spot market, there is no module supplier suspending quotes or shipments after knowing this information. This incident is expected to be resolved immediately with Toshiba quickly ramping up production to lower or fully compensate for the wafer deficit.

NAND Flash capacity to expand noticeably in the fourth quarter

Chen noted that DRAMeXchange’s market outlook for this fourth quarter remains unchanged. The supply gap in this period will be smaller than in the third quarter. This also signals that the supply will eventually meet up to the demand, thus achieving market balance.

“Several factors are at work to make this happen,” said Chen. “First, non-Samsung suppliers are gradually moving their 3D-NAND processes into the volume production stage. Furthermore, the release of iPhone X encountered unexpected delays. A part of Apple’s demand for iPhone storage components therefore has also been deferred to the first quarter of 2018. On the whole, the NAND Flash demand in the fourth quarter of this year will be lower than initially anticipated.”

Even with the slight decline in Toshiba’s output, overall supply on the market will still expand conspicuously in the fourth quarter from the third quarter of 2017. Furthermore, NAND Flash demand in the channel market has remained sluggish unless NAND Flash suppliers lower their prices and ensure that the supply is more stable.

In the first quarter of 2018, the NAND Flash demand may be sustained by the strong sales of the latest iPhone devices. However, the markets for other end products will be affected by the seasonal headwinds. From the supply side, the overall production capacity of 3D-NAND products will keep expanding as suppliers improve the yields of their respective processes. Thus, supply will likely catch up to demand during the first half of 2018 and may even exceed it slightly. Only the return of busy season in the second half of 2018 will again put strain on the supply.


This all sounds really juicy.......all we need to do now is hope SIMO doesn't muck something unexpected up. Increased NAND production is what we're waiting for, and it sounds more and more like it's on the horizon.

SIMO's story has always been that NAND production will expand meaningfully starting in the end of Q3 (last month). So it's time for the story to turn into reality, lets see what happens.

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From: Elroy10/17/2017 4:40:21 AM
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Ali Baba is Shannon's biggest customer, I wonder if SIMO is involved in this at all?

Ali Baba might be SIMO's enterprise SSD controller customer. Who knows?

Alibaba Cloud to be top-2 cloud operator in 2-3 years, says president
Irene Chen, Hangzhou; Adam Hwang, DIGITIMES [Tuesday 17 October 2017]
Alibaba Cloud under China-based e-commerce giant Alibaba Group expects to become the world's top-2 public cloud computing services providers along with AWS (Amazon Web Services) in 2-3 years, according to company president Simon Hu.

Alibaba Cloud has become the third largest public cloud services operators around the world, next to AWS and Microsoft Azure, according to IDC. Alibaba Cloud aims to surpass Microsoft Azure to compete with AWS in 2-3 years, Hu said at Computing Conference 2017 his company hosted in Hangzhou, eastern China, during October 11-14.

Success in the cloud service sector hinges more on large-scale operational experience than on technology because the former is key to understanding how to meet market demand, Hu noted. In this respect, Alibaba and Amazon are large Internet service operators, giving their cloud services an upper hand over other competitors, Hu indicated.

Although the US leads in developing cloud computing, China, with a large manufacturing sector and the world's largest population, has been fast developing mature Internet service applications, affording good opportunities for development of Alibaba Cloud, Hu noted. Eventually, only the US and China will compete in the global cloud computing market, Hu opined.

Alibaba Cloud's advantages also come from internationalization of China enterprises and the government's One Belt One Road Initiative. The advantages help Alibaba Cloud and other China-based enterprises boost industrial upgrading and technological development based on cloud computing, big data and AI (artificial intelligence) in regions including Europe, North America, the Middle East and Asia Pacific, Hu indicated.

In fact, Alibaba Cloud's confidence of becoming one of the world's top-two public cloud service operators comes from its status as the largest public cloud service operator in the China market and its cloud computing strength gained from Alibaba's e-commerce operation, Hu explained.

For China-based enterprises planning to tap the international market and foreign enterprises planning to enter the China market, Albaba Cloud can provide competitive cloud services, Hu said. Among the top-500 enterprises operating in China, one-third have adopted Alibaba Cloud's products. For manufacturing industries, upgrading toward Industry 4.0 or smart manufacturing has just begun and substantial growth can be expected in demand for cloud services.

Alibaba Cloud's cloud services cover about 40% of various industries currently and the coverage will rise to 50% at the end of 2017 due to industries' transition to digitization and cloud computing in China. While 80% of startups chose Alibaba Cloud's products to start operation in the past, Alibaba Cloud aims to have enterprises create 80% of their innovations based on its cloud computing platform in the future. The cloud computing era will truly arrive in China in 2025.

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