My Analysis of SIMG, and Dain Wessel Report
I still do believe the technology of SIMG is sound.
My understanding of SIMG is that they have solved a
very basic problem confronting the computer industry
regarding ability to transfer data at very, very high
rates, or ie, bandwidth. The first application of their
technology is for digital displays, or in this case the
flat panel display (FPD) market. Traditional CRTs are
analog, and so are older generation FPDs which is where
GNSS specializes. They take digital output from computer
and convert to analog signal which is then applied to
the "gun" of the monitor or active liquid crystal matrix of
the FPD. But FPD's are inherently digital, and the fast
and dirty solution is to just add another converter
(analog back to digital) and apply to FPD. The clean
solution is to keep signal digital through-out. However
to make a graphic display requires lot's of info, and
hence lots of data and hence lots of bandwidth. This
is where SIMG's technology comes into play, and their
solution is called Panellink. Their transmitter chip
interfaces the video graphics card and the receiver chip
goes into the monitor. The receiver would be incorporated
in with a monitor CPU making it "smart". Having a "smart"
digital monitor will also allow them to make the monitor
do more, have better picture quality, reduce jitter, etc.
So not only is it technically better, but digital monitor
will be able to do more graphic wise. Also because the
solution is a serial transport mode that can go over pairs
of copper wires, you can have a longer cable between the
CRT and the monitor, so you can put the flat panel more
places/farther away. Stick a keyboard there (distance not
a problem there) and you can start to do some real cool
things with setups and displays. This is the DVI market
or digital video interface, which SIMG basically gave away
the technology and which the industry has standardized on.
However, they hold the patent on TDMS, the "physical link"
that the data actually is transported on, and chips
incorporating their technology and spew out data at the
physical or layer one layer is where they make their money.
Another bottleneck is the transfer from the hard drive to
the motherboard. With motherboards and CPU's all getting
much, much faster, the I/O (input/output) there is now a
problem. Since SIMG is at a very basic level, a I/O
technology, or a data transport technology, this is then
yet another market open to them that they are now just
pursuing via their ATA link product which just being
sampled.
Another market their product addresses via their HDCP
product is the problem with copy protection of digital
content. Their purchase of DVDO was a smart strategic
purchase as DVDO played a key role in the emerging standard
of HDCP that was approved by the Motion Picture Industry.
My understanding is the HDCP product is technically
superior to the present mode of copy protection out there.
The application of SIMG's HDCP product applies not only to
the DVD area/players, but also to any broadcast or/ie
transfer of digital content, hence the deal with Echostar
to incorporate their technology in their satellite set-top
boxes.
SIMG is an early stage company, but the markets their
technology addresses is very, very large and they don't
have competition at this point in time. Lehman Bros
projects triple digit growth for company over next several
years. Credit Suisse was also very bullish on company.
I was on the early side, but to make the big gains, you
have to get in early when you consider the stock cheap
in order to ride it up. Obviously the caveat remains:
do your own due diligence and I have been wrong in the
past. So remember I'm as good at losing money as the next
person and am proving it right now.
Also Included is Dain Rauscher report
Dain Rauscher Wessels
DRW maintains its strong buy rating on SIMG however they
do lower the 12 mo target to $31 from $44. Here are some
highlights:
Softness in PC's held to the host side. Receiver chips
for display continue to grow strongly. The co expects
significant momentum to set in the host side business
going into the 1st qtr. 01, with continued momentum
through 01.
Current DVI penetration is roughly 7% with expectations
of 20% by y/e. The co believes blended adoption across
these markets (total market of 500 million units including
120 mil hosts, 130 mil CRT, 14 mil flat panel, 27 mil
portable pc's, 60 mil set-top box and DVD players as well
as a small no. of HDTV's) could be 15% by 01. We have
assumed SIMG captures a modes 1/3 of this market, a
conservative assumption considering the lack of competitive
pressure. SIMG is the only co with HDCP- compliant
components. SIMG is the only co with a completely
integrated solution for Serial ATA links and given the
ease of transition to Serial ATA standards, we expect a
significant ramp in shipments of these parts in the 2nd
half of 01, yielding a significant upside to our revenue
projections.
Regards, Peter. |
