SIMG Earnings Preview
October 2, 2000 - 7:32am
Credit Suisse First Boston Corporation
(PS - Correction to last post. SIMG will turn profitable
this quarter, and had a loss last quarter - PQ)
Summary
We expect SIMG to beat our $0.01 EPS estimate, driven once
again by the company's market leadership position in the
DVI and HDCP markets. We believe SIMG's DVI business is
tracking ahead of plan, as evidenced by recent announcements
by companies such as 3dfx, MARGI Systems, and Sun Micro-
systems that have adopted SIMG's PanelLink technology. With
regard to SIMG's HDCP business, we would not be surprised
to see companies such as Sony announce consumer HDCP-based
electronics products by end of this year.
Despite recent concerns regarding SIMG's exposure to
weakness in PC demand,it is our belief that SIMG's success
is less contingent on the number of PC units shipped, but
rather overall market adoption of digital technology (DVI),
which has occurred faster than we expected.
During the quarter, SIMG unveiled its first mass data
storage product, the MSLPhy SerDes chip for serial-ATA
interface for "inside-the-box" storage solutions (1-3Gbps).
SIMG is several quarters ahead of its original plan
with its serial ATA initiative; initial sampling is
expected by early 1Q01 (or 2-3 months after the specs
are set), with revenues expected by the 2H01.
We continue to rate SIMG as one of our top-3 stock picks.
We reiterate our Buy rating and $48 price target.
Silicon Image is a fabless semiconductor company that
develops and markets transmitters, receivers & controllers
under the PanelLink brand, addressing the dollar per
bandwidth concern initially in the digital display
market. PanelLink is the basis for the DDWG's DVI standard.
Investment Summary
We expect SIMG to beat our $0.01 EPS estimate, driven once
again by the company's market leadership position in the
DVI and HDCP markets. We believe SIMG's DVI business is
tracking ahead of plan, as evidenced by recent announcements
by companies such as 3dfx, MARGI Systems, and Sun Microsystems
that have adopted SIMG's PanelLink technology. With regard
to SIMG's HDCP business, we would not be surprised to see
companies such as Sony announce consumer HDCP-based
electronics products by end of this year.
Despite recent concerns regarding SIMG's exposure to
weakness in PC demand, it is our belief that SIMG's
success is less contingent on the number of PC units
shipped, but rather the overall market adoption of digital
technology. To date, DVI proliferation has occurred faster
than we expected, and we reiterate our thesis of "20/80/12"
in that once market adoption of DVI technology reaches 20%
penetration, within 12 months should reach 80%, much like
prior technologies such as AGP and USB.
During the quarter, SIMG unveiled its first mass data
storage product, the MSLPhy SerDes chip for serial-ATA
interface for "inside-the-box" storage solutions (1-3Gbps),
with a second phase in the near future that will include
an "out-of-the-box" SerialLink solution operating at 1.5-6
Gbps for long cable.
SIMG is several quarters ahead of its original plan with
its serial ATA initiative; initial sampling is expected
by early 1Q01 (or 2-3 months after the specs are set), with
revenues expected by the 2H01.
We continue to rate SIMG as one of our top-3 stock picks.
We reiterate our Buy rating and $48 price target.
N.B.: CREDIT SUISSE FIRST BOSTON CORPORATION |
