Duke, here are some of my notes from the conference call along with some of my own views:
Even though revenues were flat, a very strong June pushed new orders to a three year high and backlog grew 45%. Orders for CAMD's PAC IPD (Integrated Passive Device) products grew 42% from the previous quarter and overall orders grew 19%. Designs wins for the PAC products grew to 43 design wins from 33 last quarter and 16 in q3. There were also 25 new customers, a leading indicator of future growth. Asia was strong for PC related business.
CAMD has been releasing a study flow of new products. The new PWR product family has been qualified in European cell phone manufacturers. Qualcomm has designed in CAMD's products. The new OP-AMP product family is being designed into leading Network Interface Cards. Cisco continued to be a major customer. Customers have also begun ordering new “flip chip” IPDs and high volume shipments are to begin in Q4.
On the negative side a sharp drop in foundry business of $550,000 offset growth in PAC products. In particular foundry business from Sipex fell about 90% because of full inventories but they are expected to reorder this quarter.
Overall industry conditions have improved dramatically. A Merrill Lynch study on the passives industry sees lengthening lead times on passives products with spot shortages of some products. These favorable industry conditions should help open new doors for CAMD's IPD solutions where they can supply their new PAC products at overall lower cost and better performance versus discrete passive components. Technology trends will demand IPD solutions as more and more passive components are needed in higher performance digital cell phones, small form factor wireless internet devices, PDAs, laptop computers and so on. For example, digital cell phones need twice as many passive components as analog phones and at higher frequencies.
Overall, it looks like CAMD reached an inflection point last quarter and should show good sequential growth from here. The company expects to be profitable by Q3. Only a few of the new design wins have gone into production. As they do, CAMD should show revenue growth of 30% year over year by Q4 and be solidly profitable.
CAMD is a couple of generations ahead of the rest of the passives industry with their IPDs. CAMD is able to supply as many as 75 components on a chip where the rest of the industry is still only able to supply simple 4 to 8 component arrays. Industry studies show this new IPD technology growing 41% this year and over 100% next year. CAMD has a 30% market share of this emerging technology. As CAMD demonstrates strong growth and market penetration with their PAC IPDs, CAMD is likely to become a hot acquisition target by a number of leading passives companies such Vishay, AVX or Bourns among others. IMO $10+. |
