GNSS CC abbreviated notes
-Rev 46 to 47 mil in Q, down from 60 mil last year, up 11 percent
Q-Q
-expected flat GM
-erosion in GM stopped this Q
-expect GM to start to increase after Mar Q, due to improved efficiencies,
shipped 6 mil chips in the Q, 1.2 mil more than expected, 1.2 mil q-q volume increase
think they are gaining share over all as a result
-expect 48 to 52 mil units to ship next year due to FP TV's
-15 inch LCD monitors were selling at $250, now $170, y-y change???
-17 inch LCD monitors now $250
[Harry: I don't know if they mean from the manufacturer. I am not seeing those prices at retail yet.]
- have 3 infringement suits against 3 companies.
-only integrated solution company, everyone else is
discrete.
[Sound like they may have the same problem as ESST at
some point.]
- 5 new products in pipeline: 2 video, 3 monitor
-video currently 19 percent of rev
-video ASP's 45 percent higher than monitor
Main call notes:
-Rev up due to monitor growth continuing and FP TV display growth
-GM 37 to 39 percent in guidance
-Actual GM 35.6 percent [Harry: This does not sound all that
great to me.]
-Op Ex 21.8 mil
SGA +RD 14.9 mil
1 mil in ligitation cost in q
Tax Rate 25 per
$6 mil write off of inventory
expect to sell remaining inventory at zero margin
FP monitor rev up 1o per q-q
monitors 80 per of rev
asp's down 17 percent due to price erosion and mix
usual asp decline 9 percent
GM dow nto 31.5 from 31.7 per
looking to squeeze Fab's to get improvemetn in GM going forward
reducing cost through improved designs + yield improvements
expect GM to hit low in Dec
start to accelerate again in Mar, due to new products and
accelerated demand
video up 17 per q-q by rev (FP TV)
-expect FP TV semi sales to increase in unit volumes.
GM to be 52.3 percent fro FP TV's
DEC Q Guidance:
Rev 46 to 47 mil (flat)
Monitor rev flat, shipments will be up but ASP's will be down
most of business historical turns business, hard to estimate
accurately
GM 35 to 36 per, down due to low ASP's on monitors
selling rest of inventory (1.6 mil) at zero margin
taking 10 percent GM hit as a result
expect 20.5 to 21 mil run rate next q
1to 1.5 mil in letigation cost
tex rate flat
int income flat
Cash $105 mil down 1.9 mil q-q due to 3.1 mil share buy back
DSO 40 days down from 50 days
Inventory down 30 percent [Harry: wrote most of it off though. Accounting trick.]
turns 5.6 vers 3.3 time q-q
acounts payable down 14 mil from 29 mil
turn business 70 per of rev
unit growth is occuring accord to analyst customer survey. is rev estimates conservative? No comment. Have backlog and shipment of 26 mil already in Q.
expect significant growth of FXGA and XGA. most XGA in q,
FXGA still gain traction. expect FXGA to overtake XGA next year
DVD product is more mature with higher volumes, it is an impulse by, hard to tell if it will be a growth engine next q
TV wins coming on line soon, but it is a high price item
Fujistsu desing win for TV, largest plasma screen
Other wins but will only announce when customers do
competition in 17 inch screens, very few, mainly non-integrated
monitor decline in q 17 per blended rate
expected 9 per
-expect 6 per or less next q
Shift to FXGA from XGA should improve GM, no idea of timing
GNSS abandoned LCD projector TV's a few years ago, why are
they re-entering the market?
Made a mistake. Seeing competitor up north (Canada?)
making a market in product. going after this market
Are the shipmet numbers conservative? Share loss to competitors?
No comment on guidance. 1.2 mil increase q-q in volume indicates no share loss. Think they gained share. Negative
news story was an old design loss from early in year. We
don't track share data though. Loss was to Samsung early in
year
XGA ship about 1/3 more than FXGA in q
Shift from business to consumer purchase of monitors?
Selling to OEM's hard to tell, consumer segment is increaing
though, expect is more than 40 per now, basic function monitors still most of business
Expect 17 inch to surpass 15 inch shipments next year
50/50 level expected next year
consumer sell through strong, last week a customer ordered FP LCD die to the docj strike. Flatter monitors means they
could fly more in, given that they need to fly product in
there was no inventory in the channel
- no assumption of share share back should be assumed for next q in share count. Will not disclose average cost.
OEM are seeing XGA coming back, why? Lower cost.
1Q seasonal flat usually? No. Usually no seasonality.
Systems business is seasonal only. FP usually not. DVD has
seasonality.
10 percent customers 1 only
Geogrpahies: Korea, Taiwan, Japsn (Korea greater than Taiwan in q)
Korea nd Taiwan > 80 per of rev
Why is GM no longer declining? Some competitors leaving the market. In 2001 prices fell as a result demand went through the roof.
5th generation glass fabs coming on stream soon. Extra capacity will drive down prices, increased demand will overcome seasonality.
[GLW is doing this. have they come to the party too late.
It appears pricing traction will be nil given the capacitiy
coming on line.]
GTW only selling FP LCD monitors from now on. annoucned last week. Anyone else?
No comment. Some OEM are seeing 2 times y-y increase in LCD volumes though.
[Harry: Overall management painted an rosy picture with accelerating demand as FP LCD hit the sweet spot in price.
Eroding priced will keep marigns low and EPS growth near term will be flat. New products should increase GM after Mar. Current quarter result though impressive in unit volumes indicates a weak environment for profitability. If
they get the unit accleration they expect GNSS is undervalued. If they don't then they have come too far to fast. They seem to be in a good product segment at the right time though. Pick up in cosnumer demand is higher than I though. If true that this is the choice of consumers, the should do well as aging baby boomer upgrade their monitors to give some relief to their tired eyes.]
ennormous pressure on margins. |
