Heya Aus.. :)
<<I am concerned because it would seem that the PC market did well last quarter and PC Bios is a part of SSTI's business.>>
Tough to make blanket statements with this company. The broad brush stroke of their earnings release is that there's a 20% growth in units shipped.
The PC market *is* doing well, and SST is definitely having a stronger series of design-ins with the FWH stuff. Their comments on units shipped jives with my anecdotal research of the types of BIOS'es we're seeing on new generation motherboards. I'm seeing a lot more SST flash.
Want to check this yourself.. go to hardware review sites, and find "motherboard roundups". They usually show pictures of the motherboards themselves. SST flash in on a great deal of them.. much more than in the past.
www.anandtech.com and www.amdmb.com are some good places to start.
But SST is not getting the >50% margins they were once getting on these products, b/c STMicro and Winbond now have similar offerings. So the dilution appears to finally be happening. First mover advantage is giving them priority placement on boards though.
So, this example along with your question of consumer electronics are equivalent. SST is selling more pieces of flash, but they're getting less for each piece.
This is troubling in the sense that the company is not in as firm in control of their destiny as they once were, and are prone to the same market effects as everyone else, although probably to a smaller extent secondary to being fabless.
This pricing weakness combined with the anvil of their past misjudgments with inventory get us to where we are now.
Naturally, this will all correct itself once supply dries up in the form of decreased capex and increased demand. :)
So, an investment in this company simply comes down to.. what makes their flash better than the competition? If you believe it's better.. it's a great long term trading vehicle.. at least that's where I'm at, at this point.
All the best, docpaul
PS: I remember a long time ago, talking with you and making an educated guess that the larger flash players are abandoning the low density flash space. I now have proof! Our research facility just got done building a new server, and they bought an Intel brand network card. Guess who's flash was on it? :) |
