- Couple of firms are commenting on Sigmatel (NASDAQ:SGTL) after the co announced its results and divesture of audio codec business.
* JP Morgan is lowering their C06 revenue estimate from $186.0 million to $160.8 million and C07 revenue estimate from $245.0 million to $182.0 million. However, they are raising C06 EPS estimate from ($1.72) to ($1.32) and C07 EPS estimate from ($1.03) to ($0.84) due to lower taxes.
The audio codec business had gross margins of 40%, below average corporate gross margins of 45% for 2Q06. Firm views the divestiture as a positive for SigmaTel as it raises gross margins and improves the company's liquidity.
Although inventory days decreased 45 days QoQ from 185 days to 140 days, they remain well above the long term target of 60 days and the firm remains concerned on Sigmatel's higher inventory levels. The company commented overall MP3 demand for 2Q06 appears lower than expected, which has hurt end market sales. Firm notes, even market leader Apple's iPod shipments declined 5% QoQ from 8.5 million units in 1Q06 to 8.0 million units in 2Q06. Expects MP3 player demand to recover seasonally but are concerned some excess inventory could be left in the channel.
Sigmatel is trading at 0.8X C06 sales, below the low end of its normal trading range of 1X-3X sales. Firm remains concerned regarding Sigmatel's share loss and additional risk to estimates. Reiterates Neutral rating.
* Jefferies notes SGTL reported Q2 revenue of $44MM (+33% Q/Q), ahead of their estimate and consensus of $42MM. SigmaTel's 3600 product accounted for 15% of rev in Q2 driven by the ramp of Samsung's YP-Z5 and Creative ZEN V.
Co announced the sale of its audio codec business to IDT for $72MM in cash plus $8MM of balance sheet items. Given the current runrate of the audio codec business in Q2 ($8.6MM), SigmaTel received roughly 2-2.5x sales for this transaction. Although this transaction goes against SigmaTel's diversification strategy, they believe SigmaTel received an extremely attractive price and the cash from the deal provides much needed liquidity.
Firm's tgt of $4.50 is a slight premium to SGTL's cash/share of roughly $3.75 in Q3:06. Maintains Hold.
Notablecalls: Short term I expect SGTL to top out around $5 level. Longer term this may be the beginning of a turnaround.
* JP Morgan is lowering their C06 revenue estimate from $186.0 million to $160.8 million and C07 revenue estimate from $245.0 million to $182.0 million. However, they are raising C06 EPS estimate from ($1.72) to ($1.32) and C07 EPS estimate from ($1.03) to ($0.84) due to lower taxes.
The audio codec business had gross margins of 40%, below average corporate gross margins of 45% for 2Q06. Firm views the divestiture as a positive for SigmaTel as it raises gross margins and improves the company's liquidity.
Although inventory days decreased 45 days QoQ from 185 days to 140 days, they remain well above the long term target of 60 days and the firm remains concerned on Sigmatel's higher inventory levels. The company commented overall MP3 demand for 2Q06 appears lower than expected, which has hurt end market sales. Firm notes, even market leader Apple's iPod shipments declined 5% QoQ from 8.5 million units in 1Q06 to 8.0 million units in 2Q06. Expects MP3 player demand to recover seasonally but are concerned some excess inventory could be left in the channel.
Sigmatel is trading at 0.8X C06 sales, below the low end of its normal trading range of 1X-3X sales. Firm remains concerned regarding Sigmatel's share loss and additional risk to estimates. Reiterates Neutral rating.
* Jefferies notes SGTL reported Q2 revenue of $44MM (+33% Q/Q), ahead of their estimate and consensus of $42MM. SigmaTel's 3600 product accounted for 15% of rev in Q2 driven by the ramp of Samsung's YP-Z5 and Creative ZEN V.
Co announced the sale of its audio codec business to IDT for $72MM in cash plus $8MM of balance sheet items. Given the current runrate of the audio codec business in Q2 ($8.6MM), SigmaTel received roughly 2-2.5x sales for this transaction. Although this transaction goes against SigmaTel's diversification strategy, they believe SigmaTel received an extremely attractive price and the cash from the deal provides much needed liquidity.
Firm's tgt of $4.50 is a slight premium to SGTL's cash/share of roughly $3.75 in Q3:06. Maintains Hold.
Notablecalls: Short term I expect SGTL to top out around $5 level. Longer term this may be the beginning of a turnaround.
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