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Two companies we were following last year

May 28th, 2009 · No Comments

Are actually doing quite well. We were in and out of Sigma Design (SIGM, luckily we missed the downdraft by advising you a stop-loss at $20). We didn’t fare so well with Trina Solar (TSL), despite some profitable trades, but we explained that here, recently.

Sigma has just reported ahead of expectations, and so did Trina Solar. A few points about Sigma first:

  • Revenue rose 8%, year over year, to $51.2 million, ahead of expectations for $47.8 million, and EPS of 30 cents, excluding some costs, compared to the average analyst estimate for 24 cents.
  • There is one analyst with a $10 target (Lazard Capital Markets analyst Daniel Amir) which seems a little nonsensical to us, providing the fact that Sigma has over $8 per share ($8.32, to be precise) in cash, cash equivalents, and marketable securities
  • The eternal fear is Broadcom entering the market and taking away Sigma’s monopoly in the Microsoft IPTV world and eroding margins. It hasn’t happened yet and we heard the same things last year, but we suppose it will happen some time
  • The IPTV market itself is still growing healthily though, from 16M set-top boxes shipped in 2008 to 56M in 2013, according to iSuppli (see SIGM conference call)
  • More exciting market opportunities are opening in the cable landscape where Sigma already has a hybrid gateway platform that supports both traditional cable broadcast as well as true two-way based IP video and data over DOCSIS 3.0. The gateway can even communicate to boxes in the rest of the home. Such a transitional product strikes us as very promising, because it offers the cable industry a migration path to IPTV. Kenneth Lowe (Vice President of Strategic Marketing) argued that this represents a market potential many times the currrent telco based IPTV deployments..(SIGM conference call).

After a run-up before the figures, Sigma is now down considerably.

Trina suprised on the upside with a small profit, although the top line disappointed:

  • For the quarter, TSL posted revenue of $132.1 million, down 38.9% sequentially, up 9.5% year over year, and below the Street consensus of $142.5 million. The company posted an adjusted profit of 2 cents a share, well ahead of the Street, which expected a loss of 8 cents a share. The company said it sold 48 MW of solar capacity in the quarter, below its guidance of 50-55 MW. The company said gross margin in the quarter was 17.2%, above guidance of 15%-17%, and ahead of Q4 gross margin of 9.6%.
  • For Q2, the company expects to sell 60-65 MW, with gross margin of 18%-20%.
  • For the full year, Trina sees 350-400 MW of capacity, up 74%-9% from a year earlier.
  • Very impressive was also this: “we continued to leverage our low cost platform by reducing our manufacturing cost to approximately $0.79 per watt for our multicrystalline product.” (PR)

That is even cheaper than First Solar. It shares are up again. Turns out we were right all along about Trina Solar. Despite the very big runup this year (it’s the best performing solar stock), longer-term, there should still be money in it.

Tags: SIGM · TSL