10:59 ET ******
Silicon Storage (SSTI) 28 3/8 +2 3/8: It's nice to get some good
news from a chip maker for a change. SSTI pre-reported after the
close yesterday that it expects to report Q3 revenue north of $150
mln, a 45% sequential improvement and 325% yoy. EPS should
come in greater than $0.35 vs consensus of $0.25 when the
company reports Oct 12. The company was also bullish for next
year stating that demand should continue to outstrip capacity well
into 2001. How are they able to do this in light of Intel's warning?
Better-than-expected yield improvements, production ramp-up at
certain foundry partners of several new products and a diversified
product offering with over 50 types of end applications for its flash
products. Also, a healthy sign is that SSTI expects to continue
increasing capacity to meet growing demand. SSTI has made it a
habit of pre-reporting better-than-expected results....Pricing has
remained strong at SSTI particularly for its low density Flash
memory products as set-top boxes, optical drives, and DSL and
cable modems are fueling demand for low density Flash.
Furthermore, most Flash manufacturers are increasingly moving
upstream to the higher priced high-density Flash market leaving
SSTI to ship high levels of low-density Flash. Management expects
pricing to remain strong for the next several quarters and the
company is accepting orders as far out as Q2 2001....Looking
forward, the company has several new initiatives which should
continue to pad its top line. In March, SSTI signed a deal with Intel
in which Intel licensed SST to supply flash memory products
compatible with Intel's 800 Series Hub Architecture chipsets and
also agreed to provide SST information relating to Intel's 82802
Firmware Hub interface. With every Intel chipset shipped using
Firmware Hub, SSTI has a major opportunity going forward - an
opportunity that alone could add $40 mln in revenue over the second
half of 2000....The stock was cut in half after an early July
downgrade from Salomon to Neutral from Buy, however, the stock is
almost back to that level. (chart)...With SSTI, investors have been
undeterred by the overall chip market fears as the company
continues to post solid numbers coupled with its exciting new
initiatives. -- Robert J. Reid, Briefing.com
briefing.com |
