Here is something I pulled off The Lab Rat Cage regarding QKTN....
Check it out at www.tradesmart.com/labrat
FINANCIALS
Quickturn has been growing its sales at over 40% for the last 3 years.
In the past 12 months its growth has cooled off to a still respectable
25%. A Morgan Stanley rep thayt I spoke to attributed this to a product
realignment in December 95 through March 96 which resulted in flat sales
for those two quarters. December 95 saw sales of 23 mil and March 96 was
23.09. Since then, things have gone back on track, with Jun checking
in at 25.3 and Sep 96 at 27.12. In the meantime, earnings for '96 have
leaped from 17 cents a share to 19 to 21. Smells like growth is chugging
along at more than 25% these days.
So, with the stock at 18 and the p/e hovering below 20, why is a
high tech stock with steady grwoth not trading atround, say 25 or 30
p/e?
FUNDAMENTALS
The answer might lie in the type of business Quickturn is in :
providing capital goods to microchip manufacturers engaged in
testing silicon desgins before fabrication. Because of the
association with 'Capital Stock', 'Microchip Manufacturers'
and 'Semiconductor Fabrication', Quickturn has been lumped
together with those providers of high tech manufacturing
goods, companies that sell 20-30 million of goods to one
customer, then do zero sales in an industry downturn. Those
guys' stock look more like rollercoasters than the stuff
they've got at Six Flag's Great Adventure.
However, instead of building wafer manufacturing plants,
Quickturn develops systems to test new designs before they
are fabricated. Usually, a fabrication plant is setup
before the design is completed, and the first few months of
chip runs are dedicated to dozens of test-cycles. Quickturn's
emulation products allow a manufacturer to design a virtual
representation of the chip, and run it through millions of
cycles, comparing the results to expectations. Therefore,
the idling of capital stock and the shipping delays that
are the bane of every high tech nanufacturer can be
drastically shortened, if not altogether eliminated at
the fabrication stage. QKTN is all about saving customers
money, not jumping on the high-tech super-growth bandwagon.
CUSTOMERS
So far as I can tell, they are the largest company in this line
of work. There are two privately held California-based companies that
do less than 50 million combined. Quickturn's customers include
Sun Microsystems and Philips. I called up the company's shareholder
relations flak and asked if Intel had bought anything from them.
My calls, of course, weren't returned.
Motorola is a great Quickturn success story. No need for me
to summarize it; take a look at the story first hand (from
Quickturn's point of view, of course...)
Emulation Gives Motorola Best Guarantee of First Turn Silicon
Philips just started purchasing from Quickturn in November. The rumors
that I heard that 4th qtr's earnings would be below projections sound
like the short talking down the stock. A private investor whose
been on the ball with calls like these tells me from this announcement
he'd be surprised if Philips didn't sign up for 3 mil+ this quarter.
The sale also establishes themselves as a force in Europe, where
they've had minimal income up to now.
Quickturn Signs Philips Deal
All in all, sounds like a decently priced tech stock.
Comments, anyone?
LabRat |
