Friday, October 13, 2006

Calls of Note Part 1

Cowen says their checks indicate that GSM carriers worldwide including Cingular, T-Mobile, and China Mobile are getting ready to launch GPS-based location based services (LBSs) in 2007, with Cingular likely to move first in 1H07, followed likely by T-Mobile and China Mobile.

Firm believes SiRF (NASDAQ:SIRF) is well positioned as the key GPS chipset supplier for handsets used in the LBS offering, and that there is upside to their, and Street, 2007 estimates, driven by the volume ramp in handsets. With the stock having declined to the low-$20 range, they view the risk/reward as attractive and recommend investors take advantage of the share weakness to build positions as they expect the shares to outperform the market by 40% over the next 12 months.

Based on firm's checks with industry sources, they believe GSM operators worldwide are finally getting to launch GPS-based LBS in 2007, with Cingular likely to launch in 1H07, followed by T-Mobile and China Mobile. SiRF has significant design wins with key handsets OEMs including Motorola, Samsung, and RIM, and should benefit significantly from such LBS launches.

SiRF is expected to report Q3 earnings results on October 19. Firm expects Q3 results to be in line with consensus estimates of $63M/$0.22. For Q4, given the seasonal slowdown in the month of December for the PND business, firm expects the company to guide for only modest growth, which could be slightly below the consensus estimate of $68M (8% growth).

Notablecalls: The note started out very strong.. and then they are telling us that co could guide down 4Q? At least now we know that if the co does guide down there is at least one analyst going to defend the stock. That alone may help the stock ahead of the earnings.

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