Friday, June 15, 2007

Trident Micro (NASDAQ:TRID): Low valuation + strengthening demand

- CIBC is reiterating Sector Outperformer rating and $28 tgt on Trident Micro (NASDAQ:TRID) after CFO John Edmunds participated in a series of investor meetings during the CIBC Consumer Semiconductor Conference in NYC. Industry indicators signal a strong C2H07, and image processing champ TRID remains firm's favorite DTV pick.

Based on recent checks, they believe rebounding panel pricing is being partly driven by robust 2H 32-inch+ Tier-1 TV demand (TRID's sweet spot). These leading indicators, & the rapid ramp of 1080P (Sharp, Samsung, & Sony own 85%+ of this segment) point to a strong CY2H07 for TRID.

Checks further indicate strengthening demand could generate CY07 TV unit sell of as much as 78M, well-above CIBC's current 72M estimate, with growing Tier- 1 mix. They also expect TRID should be able to file its delinquent 10K/Qs by mid- July, prior to their release of June Q results.

At ~11x $1.80 CY08 EPS estimate, TRID is trading at a significant ~40% discount to its peers. CIBC believes TRID presents investors with compelling value as the company is set to leverage its impressive product portfolio against surging demand in the seasonally strong CY2H.

Notablecalls: CIBC's right with their on TRID here. Firstly, channel checks done by other firms indicate low panel inventory and seasonal buildup starting in earnest. AUO has said panel inventory in channel is normal. Also, pricing has been OK. The >37" size LCD TV is seeing good demand in the U.S.

Also, channel checks indicate Mediatek has not been able to crack into Sony or Sharp and TRID still very well entrenched at major TV OEMs. The single-chip (MPEG decode + back-end) TV solution developed by Sony/NEC keeps lurking in the background, though.

With a low valuation and 14% short interest, TRID could see some upside here.

Also, keep Genesis Micro (NASDAQ:GNSS) on your radar. Note the co has $5 cash per share on its balance sheet and carries a hefty short interest. They are competing with TRID and RBC Capital noted yesterday thyy believe that the co is on track to win some designs from Tier 1 OEMs
in late CY07.

One more thing - note that Sony is coming out with an entry-level LCD TV line to compete with the likes of BRLC's Olevia.


notablecalls said...

TRID is making me look stupid.

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