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   Technology StocksSilicon Motion Inc. (SIMO)


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From: Elroy10/25/2021 10:26:15 AM
1 Recommendation   of 2454
 
Silicon Motion Technology Corporation ... announces today its annual cash dividend of $2.00 per ADS, a 43% increase from the $1.40 per ADS declared in 2020.


https://finance.yahoo.com/news/silicon-motion-announces-annual-dividend-120000943.html

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To: Elroy who wrote (2416)10/26/2021 12:01:38 PM
From: Area51
1 Recommendation   of 2454
 
Silicon Motion Technology (NASDAQ:SIMO) is set to give its latest quarterly earnings report on Wednesday, 2021-10-27. Here's what investors need to know before the announcement.

Analysts estimate that Silicon Motion Technology will likely report an Earnings Per Share (EPS) of $1.64


https://www.benzinga.com/news/earnings/21/10/23559987/silicon-motion-technology-earnings-preview

Do they report after the close?

Good Luck. I added a single call just to make it more interesting. The trading from the last earnings report was interesting: four strong days after earnings took it up about 22% and then it lost about two-thirds of that gain over the rest of the quarter despite a nice distribution increase just announced. I figure if earnings were bad they would have held back the distribution increase to mitigate the effects of a bad report. Hopefully a nice beat and a nice warm-up for UAN's earning release next week.

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To: Area51 who wrote (2420)10/26/2021 12:54:21 PM
From: Elroy
   of 2454
 
SIMO reports after the close of market Wednesday. Unlike most companies which report in the first 15 minutes after the close, SIMO usually reports 2-3 hours (I can't recall which, it's either 2 or 3) hours after the close. So....don't wait at market end eagerly looking for the news, it's coming a few hours later.

SIMO's current revenue growth spurt is so amazing that I haven't got a clue what to expect in terms of guidance. It seems like they should slow down at some point, but then again they indicate foundry constraints are impeding their revenue growth, so as long as that is the story, I guess SIMO's revenue growth will continue until their ability to supply catches up with demand.

My hunch is Q3 2021 is about $260m sales and EPS about $1.70-$1.85. Q4 guidance perhaps up a bit from Q3, but who knows?

That level would position them (if the demand is really there) to fairly easily deliver $1.2 billion in sales in 2022, and I'd expect operating margin to increase due to leverage, so maybe $400 million in operating profit, $80m taxes, and you've got $320m net income, almost $10 per share.......

They say they have $1.5 billion in firm backlog as of Q2 2021, and they expect backlog to increase in Q3 and Q4, so the 2022 revenue number could be higher than $1.2 billion.

And I can see gross margins going up since they've said repeatedly that the major growth driver of 2022 is their latest SSD chip which is made at 12nm, so presumably carries a higher gross margin compared to legacy products made at 26nm and below.

The main question I have about SIMO is if these numbers are even remotely close to what is coming, why doesn't a larger semiconductor with a 30x forward PE buy SIMO for $150? It would be immediately accretive to their buyer's EPS and revenue per share growth, and SIMO generates loads of cash which could benefit lots of these debt laden larger semi company's balance sheets. Maybe there is Taiwanese law which blocks acquisitions? Buying SIMO seems (to me, at least) to be a no brainer.

MCHP makes high end flash controllers. So does MRVL. Intel makes logic processors for consumer devices. AVGO used to be an acquisition machine. Why one of them doesn't scoop up little SIMO for 15x?

SIMO has low valuation and (currently) high growth. What else does a buyer want?

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From: Elroy10/27/2021 7:33:31 PM
   of 2454
 
SIMO reports Q3 and guides Q4 to flat to up 5% in sales, gross and operating profits about flat to up a bit, probably depending on sales growth.

No commentary on 2022 outlook.

Ok, I would call that an in line report, and not sure it moves the share price up or down. The call tomorrow with commentary on 2022 will be the share price driver, but the valuation remains decrepit.

SIMO is on a $7.00 per year EPS run rate, and has $12 per share cash and a share price of about $70.

It's cheap!

But this report certainly doesn't seem like the thing that pushes the share price up to $100. I wouldn't be surprised if SIMO head back down toward $60 if the call is uninspiring.

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From: Elroy10/27/2021 7:44:43 PM
   of 2454
 
SIMO's balance sheet had accounts receivable up $40m, and account payable down $11m, so there's $51m in cash waiting to appear when those two trends normalize in Q4. Next Q should be a huge cash generation quarter.

Not sure what it will take to get SIMO's share price moving higher, but this report doesn't seem like it. It's pristine solid balance sheet, and strong fundamental performance, sales up, profits up.......and investors don't seem to care.

OK.

At least we get 50 cents dividend going forward instead of 35 cents.....

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From: Elroy11/24/2021 5:39:43 PM
   of 2454
 
NAND Flash Revenue Rises by 15% QoQ for 3Q21 Thanks to Demand from Smartphone and Data Center Markets, Says TrendForce

The growth of the NAND Flash market in 3Q21 was primarily driven by strong demand from the data center and smartphone industries, according to TrendForce’s latest investigations. More specifically, NAND Flash suppliers’ hyperscaler and enterprise clients kept up their procurement activities that began in 2Q21 in order to deploy products based on new processor platforms. Major smartphone brands, on the other hand, likewise expanded their NAND Flash procurement activities during the quarter as they prepared to release their new flagship models. As such, clients in both server and smartphone industries made significant contributions to the revenue growth of the NAND Flash industry for 3Q21. At the same time, however, suppliers also warned that orders from PC OEMs began showing signs of decline. On the whole, the industry’s quarterly total NAND Flash bit shipment increased by nearly 11% QoQ for 3Q21, and the overall NAND Flash ASP rose by nearly 4% QoQ for the same quarter. Thanks to rising prices and expanding shipments, the quarterly total NAND Flash revenue increased by 15% QoQ to a new record high of US$18.8 billion in 3Q21.

Moving into 4Q21, the impact of the ongoing component gaps has widened to numerous application segments of the NAND Flash market as the capacity crunch in the foundry market remains unresolved. Currently, NAND Flash components are in abundance relative to other kinds of key components. For OEMs and ODMs, the differences between the NAND Flash inventory level and the inventory levels of other components have been growing over the past several months. Therefore, they have to scale back orders and reduce stock for NAND Flash. As inventory adjustments are happening, NAND Flash contract prices will start to drop and thus bring about an end to the several quarters of strong revenue growth enjoyed by suppliers.

https://www.dramexchange.com/WeeklyResearch/Post/2/11144.html

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From: Elroy12/2/2021 1:38:22 PM
   of 2454
 
I think MRVL reports after the close.

It's going to be a glaring example of the valuation disparity between MRVL and SIMO.

MRVL is a house of cards. They've gotta keep acquiring companies to make the numbers confusing so that investors don't see that MRVL is just a collection of so so semiconductor companies. It's a classic roll up destined to fail.

Why they don't use their 40x forward PE to buy SIMO for 20x 2022 EPS (that might be $160!) is beyond me. It would be immediately accretive to MRVL's EPS, it would remove a competitive threat, SIMO owners couldn't resists a $160 bid, and SIMO's massive cash generation would help fund MRVL's acquisition focus and pay down MRVL's mountain of debt. What in the world reason is there for MRVL to NOT want to be the undisputed global leader in client and enterprise flash controllers?

From 2023 on SIMO is going to begin eating MRVL's enterprise flash controller business with probably a superior chip at 70% of MRVL's price.

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From: Elroy12/3/2021 11:34:09 AM
   of 2454
 
I don't know why SIMO is up so much today. SIMO did a presentation at CSFB yesterday, maybe it was after the close, and maybe they said something interesting.

This is Phison's ticker in Taiwan trading.

Up big time in last 2 trading days.

Maybe something is up? SIMO - Phison to merge, or one acquire the other?

Interesting times!

finance.yahoo.com

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From: Elroy12/3/2021 12:18:07 PM
2 Recommendations   of 2454
 
Here are some comments from MRVL's call that may affect SIMO:

in our SSD business, we benefited from a strong ramp of DIY controllers directly to a Tier 1 cloud customer.

the design win funnel and level of activity on cloud optimized silicon engagements continues to accelerate, and we have recently won another socket with our storage accelerator.

At our Investor Day, we discussed this new $500 million market for our storage business and cloud storage accelerators and disclosed our first design win with the cloud customer. Now a key storage partner, KIOXIA, recently announced production availability of their NVMe over Fabric SSDs, which will also use our storage accelerators.

Moving on to our consumer end market. Revenue for the third quarter was $183 million, growing 10% sequentially and 20% year-over-year.

Looking ahead to the fourth quarter, we expect revenue to grow sequentially in the low single digits on a percentage basis and year-on-year growth in the double digits on a percentage basis. We are benefiting from strong growth driven by our SSD controllers that we have targeted a differentiated sticky, long-lived and high ROI applications such as game consoles.

From a base of approximately $4.4 billion in fiscal 2022, we expect the combined Marvell and Inphi business to continue growing in fiscal 2023 at the 30% year-on-year rate we are currently achieving.

----

The MRVL call is aggressive and impressive.

It might be a good idea to ignore valuation and buy some MRVL stock. They seem like their high end business is growing well, with increasing design wins in each of the past three years, a record year expected for design wins in 2021, and their design wins are long lasting and sticky.

There's no way they are going to buy SIMO. SIMO is too consumer focused, I get the impression MRVL would rather dump their legacy consumer semiconductor business (they were massive in semiconductors for hard disk drives) and be only enterprise/cloud/data center high end stuff. That stuff gets a valuation to the moon, and that stuff makes MRVL a great acquisition candidate for NVDA or any of the super massive semiconductor companies.

SIMO will plod along eating up the low end share that nobody wants, so it's still not bad as PCs and cell phones will continue to sell, and each device needs a controller, and as far as I can tell SIMO is close to owning that low end market. But.....it's not sexy, at all, compared to this MRVL high end stuff.

MRVL expects to grow sales 30% next year, all organic. They expect high growth to continue after that, so it's not just a one year jump. They expect expenses to grow much less, like maybe 10%. MRVL expects their cloud revenue to be $400m next year, and then to double in the following year. This space (the cloud) is the place to be. The valuation could go to crazy levels if MRVL becomes a major cloud semiconductor provider - perhaps they already are.

Yeah, after reading their call MRVL seems like a brilliant investment. SIMO is following along behind them picking up the low gross margin crap that MRVL doesn't want to make any more.

If MRVL's strategy were to be a consolidator, they might acquire SIMO. But that's not the strategy. Their strategy is to be as big as possible in the future state of the art products area. Consumer is a distraction for them. I wouldn't be surprised if MRVL tried to sell their disk drive business semiconductor business to cash rich SIMO, let them waste their time on that legacy crap.

Depressing for SIMO. But, at least SIMO is highly profitable, and appears to have a strategy to return cash to shareholders, so it's dividend yield is nice and should grow from here. It's not an exciting tech stock like MRVL, but it is a necessary cash machine.

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From: Elroy12/6/2021 6:39:07 PM
   of 2454
 
Silicon Motion Announces New $200 Million Share Repurchase Program and Reiterates Guidance

finance.yahoo.com

“With less than a month to go, 2021 is turning out to be a stellar year for us and we are excited about our prospects next year,” said Wallace Kou, Silicon Motion’s President and CEO. “We have a long track record of returning excess capital to shareholders, primarily through dividends, but also though share repurchases. On October 25, we announced our annual dividend that is 43% higher than the previous one. We are now following up with a program to purchase up to $200 million of our ADSs over the next six months.”

-------

Over next six months?

Man, why they are pumping up their share price BEFORE making a large share repurchase is beyond me.

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