| From: Elroy | 10/6/2023 8:31:38 AM | | | | | | This puts Q3 at about $170m sales and 80 cents EPS.
SIMO may be back up to $200m per Q in sale by next quarter?
MXL blew it!
TAIPEI, Taiwan and MILPITAS, Calif., Oct. 06, 2023 (GLOBE NEWSWIRE) -- Silicon Motion Technology Corporation (NasdaqGS: SIMO) (“Silicon Motion” or the “Company”), a global leader in NAND flash controllers for solid state storage devices, announces that based on its preliminary third quarter financial results, sequential revenue growth is expected to be slightly above the high-end of its original guidance range of 15% to 20%, which the company issued on July 28, 2023. Gross margin (non-GAAP) is expected to be similar sequentially and in-line with the original guidance range. |
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| From: Elroy | 10/26/2023 9:08:36 AM | | | | | | From the MXL call yesterday.....
Ross Clark Seymore
Got it. And my last one, and forgive me for speaking in 3. I know it's a confidential process in the arbitration with Silicon Motion. But any sort of update on either the timing, a reiteration of what you said before, but the timing of it or the potential magnitude, any sort of color on that is that tends to be the most frequent question I get. And again, I appreciate your somewhat, if not significantly limited in what you can say.
Steven G. Litchfield
Yes. I don't think anything has changed, just as we had updated before. I mean the only change is that Silicon Motion filed for arbitration, confidential process. So you're correct in that we can't add any more color there. Still expect that arbitration process to take 12 to 18 months.
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That's it! |
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| To: Sam who wrote (2736) | 10/26/2023 10:22:24 AM | | From: Elroy | | | | Yeah, I aslo don't know why it should take that long, but my hunch is MXL will delay delay delay the process as long as possible, and then pay $160m plus a bit if that's the judgment, and if it's more (like, $1 billion) MXL will try to do the deal in 18 months rather than pay $1 billion. Whether SIMO will agree to do the deal following a $1 billion judgment is the question, and I sort of doubt it, which will perhaps leave MXL facing bankruptcy.
By Q4 2024 it's not that hard to see SIMO with $15 per share in cash, $5 per share in EPS, and a share price around $85. At that point someone else will probably buy them for $120 per share, so why sell to the losers at MXL?
I find it hard to see how MXL's termination was a smarter idea than doing the deal. With the termination they may have to pay $1 billion, and not own SIMO. Anything outcome might happen, but that seems the most reasonable. I think MXL+SIMO with $3 billion of 8% debt would have a lousy balance sheet, but be able to continue as an ongoing entity. MXL with a bad judgement may not be able to continue.
I do wonder whether Singapore arbitration wants to answer the many questions that are (surprisingly) not yet determined (as far as I can tell) by mergers and acquisition law. "What exactly are damages from breach?" is a challenging question to answer, and I wonder whether Singapore arbitration wants to make up it's own opinion on what Cayman Island's law says on this topic (hint - it doesn't say much). |
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| From: Elroy | 10/27/2023 9:43:51 AM | | | | | | From Intel's call yesterday
Moving to the client. CCG (PCs) delivered another strong quarter, exceeding expectations for the third consecutive quarter, driven by strength in commercial and consumer gaming SKUs where we are delivering leadership performance. As we expected, customers completed their inventory burn in the first half of the year, driving solid sequential growth, which we expect will continue into Q4. We expect full year 2023 PC consumption to be in line with our Q1 expectations of approximately 270 million units. In the near term, we expect Windows 10 end-of-service to be a tailwind, and we remain positive on the long-term outlook for PC TAM returning to plus or minus 300 million units.
Revenue exceeded our expectations across all major lines of business.
Net inventory was down $500 million or 7 days in the quarter. We also significantly improved the linearity of our shipments, which brought DSO down by 5 days.
Moving to third quarter business unit results. CCG (PCs) delivered revenue of $7.9 billion, up 16% sequentially and ahead of our expectations for the third consecutive quarter. Customer inventory levels are healthy, and the market remains on track to our January consumption TAM signal of roughly 270 million units for 2023. CCG's operating profit doubled sequentially to $2.1 billion on higher revenue, sell-through of reserved inventory and stronger ASPs driven by strength in our commercial and gaming products in the quarter.
Now turning to Q4 guidance. We expect fourth quarter revenue of $14.6 billion to $15.6 billion, delivering on our January commitment to grow revenue sequentially throughout 2023. In the client business, we're encouraged by the return of historical purchasing cycles as our channel checks, partner feedback and ASPs all point to healthy inventory levels and growing demand.
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My two cents - SIMO's results and guidance are going to be great. PCs are strong, expected to grow in Q4, and that's the majority of SIMO's business. It remains unclear how cell phones are doing, but cell phones are much more depressed than PCs now. SIMO's PC SSDs were down 35% year on year last quarter, and cell phone controllers were down 70% year on year. So......with PCs on the way up, we've still got the "cell phone bounce" to look forward to. It will come eventually, and when it does that's another revenue pop which we get to enjoy.
MXL really blew it. In Q4 MXL is going to do about $135m and SIMO might do $20m. Combined, they would look great, and highly profitable. Instead, MXL looks like it's going down the tubes, while SIMO heads back up.
Now that we know China will approve a SIMO acquisition (hopefully) in 1-2 years the company hopefully finds an alternative buyer. SIMO's a defensible cash cow with modest growth. Loads of high PE diversified semi companies would benefit from SIMO's strong market position and strong cash generation. Just gotta wait for the semi cycle to turn higher, and everyone is saying that will happen 2025 at the latest. Lets see - hopefully SIMO eventually sells itself for $130 and the MXL termination turns into a blessing. |
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| From: Elroy | 10/30/2023 8:07:30 AM | | | | | | | Silicon Motion Announces Annual Cash Dividend Payable Quarterly |
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TAIPEI, Taiwan and MILPITAS, Calif., Oct. 30, 2023 (GLOBE NEWSWIRE) -- Silicon Motion Technology Corporation (NasdaqGS: SIMO)(“Silicon Motion” or the “Company”), a global leader in designing and marketing NAND flash controllers for solid state storage devices, announces today its annual cash dividend of $2.00 per ADS.
The Board of Directors of the Company has declared an annual dividend of $2.00 per ADS1,2 which will be paid in four quarterly installments of $0.50 per ADS3 according to the following anticipated record and payment dates:
| | Record Date | Payment Date | | | November 16, 2023 | November 30, 2023 | | | February 20, 2024 | March 1, 2024 | | | May 9, 2024 | May 23, 2024 | | | August 8, 2024 | August 22, 2024 |
The Company’s depository bank’s DR books will be closed for issuance and cancellation on each of the record dates.
“Silicon Motion has had a long history of returning cash to shareholders through our dividend program. Our business continues to generate strong cash flow and we believe that we are well positioned to drive long-term growth of our business and improve profitability. While the dividend program was halted in 2022 due to the proposed acquisition by MaxLinear, our Board has decided to reinstate our annual cash dividend payments now that we have terminated the transaction,” said Wallace Kou, President and CEO of Silicon Motion.
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| From: Elroy | 11/1/2023 12:43:34 PM | | | | | | AMD comment on Q4 client (PC) sales expectations from their call yesterday.....
Year-over-year, we expect revenue for the Data Center and the Client segments to be up by strong double-digit percentage
In the fourth quarter, we expect to benefit from strong Data Center and Client momentum |
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| From: Elroy | 11/1/2023 8:12:20 PM | | | | | | SIMO reported sales of $172m, and guided Q4 sales to be 10%-15% higher than Q3.
They increased cash by $45m in the quarter, largely from selling down $50m inventory. They've not got about $10.5 per share cash, and no debt.
The financial model isn't yet fixed. Gross margins were only 43%, and are supposed to be 43% again next quarter. Normally SIMO's gross margins are about 48%, so this deserves some explanation.
Operating cost are high relative to revenue. SIMO's sales have ranged from $251m and $123m in the previous four quarters, so it's hard to determine what is their "normalized" revenue run rate, and where should be normalized quarterly operating expenses.
It's possible to see SIMO back up to the $250m per Q revenue run rate by Q4 2024. If gross margins can get back to 50%, and then the enterprise flash controller, Ferri and market share gains in client SSD can give them some forward revenue growth, and nothing goes majorly wrong, I can see the share price pushing up toward $100 per share with perhaps $7-$8 in annual EPS. Cash should be perhaps as much as $450m by Q4 2024.
Then if the MXL settlement winds up giving them $200m (should be more), that's $650m.
Then if they finish the new office building, and do the planned sale and leaseback of the land + occupied office building that's probably another $150m-$175m.
It's not that hard to see SIMO having $800m cash and no debt by the end of 2025. I imagine they will bump the dividened, but also do a share repurchase if it's lingering anywhere below $80. |
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| From: Elroy | 11/2/2023 9:02:14 AM | | | | | | Listening to SIMO's conference call.
OEM demand continues to improve. They are shipping to more customers than ever before, are expanding their footprint with module makers, and are working with all the NAND makers.
Controller technology is advancing with NAND complexity.
Inventory in both PC and smartphone market are normalizing.
SSD controller business - they expect stronger PC demand in the coming months. The are shipping PCIe gen4 to a Korean NAND maker, and they are selling PC SSDs to all but one major NAND maker.
PCIe gen5 will be used in high end PCs in 2025, and will eventually become standard. They've already got late 2024 design wins for this product. Their gen5 controller will have an ASP about double the gen4 SSDs. Gen5 SSDs will be mainstream in 2026.
The new enterprise controller will begin production in late 2024, and then generate more meaningful revenue in 2025 and beyond.
UFS controllers - they are gaining market share. UFS 4.0 is not expected to be mainstream until 2025. They are working on a UFS 4.0 solution using 6nm processes. They hope to have production volumes of UFS 4.0 in 2025. They are selling eMMC and UFS chips outside of the smartphone space.
Financial comments (from IR dude, CFO is not on the call)
most of these comments are in the press release.
Gross margins will improve gradually over the next few quarters. Most NAND makers are selling products below cost for the past few quarters. SIMO's pricing is reflective of the weakness of the NAND makers. SIMO's COGS remains high, and this may come down over the next few quarters. They think they will gradually return to historical gross margins over time, but no timeline was provided.
Operating expenses will be elevated until Q3 2024. This is due to high R&D expenses for three new major products, which are 1- gen 5 SSD controller, 2- UFS 4.0 controllers, and 3- something else.
Q&A.
By 2025 80% of value SSDs will utilize QLC NAND. And QLC will enter the datacenter sometime in 2026/7.
We believe SIMO customers will gain market share in 2024. SIMO is gaining market share in the transition of PC SSDs to gen4 and gen5.
Q: What's the expected speed of the gross margin recovery, and when will you get back to 48%-50% gross margins? A: it depends on a combination of NAND industry health, and new product launches. We are not providing specific guidance for next year.
Q: Will Micron make their own UFS 4.0 controller? A: They've been working on it for four years, and it's not yet known how Micron will move forward. SIMO is engaging other NAND makers for UFS 4.0 as well. |
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