Ali,
I'm not quite sure where you're getting those figures as the only places in the report I'd seen Accounts Receivables and inventory numbers were at the bottom of the report and were comparing them from December 26, 1999 to September 24, 2000, thus it's not a quarter to quarter (sequential) comparison. In those 9 months, PMC-Sierra has raised revenues at least as much as the inventory increase that you have. Back then they were selling about 55 products and now are selling 70 products. Thus, selling considerably higher dollar numbers of product as well as an additional 15 products basically keeps the inventory level in lock-step with the revenue level. From the conference call, they've got 45 days receivables, which hasn't changed from prior quarters with 6 inventory turns per year, which is has also remained basically constant.
Other things from the conference call:
419 design wins for the quarter with a substantial increase of 2444 design wins pending.
Headcount is 1451 at the end of Q3 with a 97.44% retention rate (people just don't leave PMC-Sierra, especially when their company was one acquired). Head count to grow another 700+ employees in 2001 with half from acquisitions, half from recruiting.
Net income was up 200% year over year compared to 140% year over year revenue growth.
Dozens of design wins for the CHESS chipset, and about 75 wins for VORTEX with a roadmap for further penetration and no competition other than internally developed ASICs from some customers. vast majority of VORTEX design wins are multiple chip wins.
Joe Osha of Merrill Lynch asked about "mega" sellers, and the response was no product more than 7% of revenues with tons of 3-6% products. Still the chips in the class of 1997 bringing most revenue (i.e. SPECTRA-155 and FREEDOM) with the class of '98 chips (SUNI, COMET, etc.) coming on strong
Fabbing 90% of historical products at TSMC and Chartered with a larger portion of QED's products through IBM (but also at TSMC). Some other products at LSI Logic.
Huge opportunities in carrier class Ethernet (Gigabit and 10 Gigabit, DWDM). Where there's getting to be a glut of long haul bandwidth, there a huge short haul shortage. Hundreds of engineers working on yet unannounced products for this area that will be announced in the next 3-6 months
Quite a bit of designs on 0.18u with work on getting libraries, etc. to 0.13um for 1H2001 progressing nicely
Formal integration department (like Cisco's) for incorporating acquisitions into PMC-Sierra rapidly with a blueprint/checklist for getting e-mail, payroll, etc. all in place quick and easy.
183.4 million shares used for Q3 with that growing to about 187.4 for Q4 with completed Switch-On acquisition and employee stock purchase plan.
I'm just giving a WAG on Q4 numbers, but I'd say revenues greater than $240 million with net income of greater than $57 million or $0.36 per share, versus the current Q4 consensus (which may get raised shortly) of $0.31. At $0.36 EPS in Q4, with that 4 million share dilution, that puts FY2000 earnings per share at $1.05, easily beating the consensus estimates of $0.94.
My WAG was based on what may be a conservative sequential 20% revenue growth. I say conservative because the previous three quarters have produced 27%, 30% and 32% sequential revenue increases all after PMCS gave their same "over 15% growth" guidance on the prior quarters' conference calls.
Happy investing...
-John |
