Pre-release of lower earnings.
Ouch, I am getting a bit frustrated with the revenues of this company. I guess we knew that the backlog was down in the NVSRAM business at the end of last quarter. It stood at $3.3M for the NVSRAMs and $6.9M for the Battery Management components. It has always been my bet that the Battery Management sector will be the one to take off, which looks like is happening. But it looks like BMRQ may have been designed out of some slots for their NVSRAMS products. The next backlog numbers will tell.
Since the Battery management sector had a $6.9M backlog, it must be doing well. From the release, management has said BM should see a sequential increase in revenues AND a year to year increase. So, BM revenues will be above the $5.38M they did in 3Q96. With the backlog at $6.9M, I think they can do about $7.2M in BM business. This means that the NVSRAMs are very weak because they directed the expectations to 10% lower than the $11.45M in total revenues they did last Q, which would be $10.3M.
Based on the conservative management style of this company, my revenue estimates are at about $11.0 M. This leaves $7.2M in Battery Management ICs and an estimated $2.4M in NVSRAM, and about $1.4M in Real time Clock products.
I think it may have been unwise to tell the public that Benchmarq would not pursue more NVSRAM business. It may have caused some design outs. Anyway, this stock is a Battery Management play.
The downside to the current situation is that the revenues are on the wrong path, down. The upside is that the Battery Management revenues could be surprisingly strong, which could add confidence to the expectations in 1998.
If Battery management does not show a solid increase, the stock is overvalued.
Of course the stock should come down tomorrow, given its pre-release. At this point, I see $22 to $28 as a possible trading range in the next few weeks, but its anyone's guess. I will probably buy more below $25 if it gets there, and before the earnings release. After the earnings release, I will re-evaluate. I am hoping to hold the stock, waiting for what I think is inevitable, strong growth in the Battery Management business.
Rex
WARNING: The information above is not guaranteed for accuracy. I am an amateur analyst. I can make mistakes. Please read later posts in case estimates change or mistakes are found. One should not invest based on this information alone. Do your own research. There are large risks in stock trading. I will not be held liable for any losses caused by taking my advice. I usually have positions in the stocks I mention. I am not a certified financial planner. Please consult a certified financial planner to determine if you can afford to lose any money you may invest. . I will not be held liable for any losses caused by taking my advice. I do not have any contact with management to guide estimates. Benchmarq does not publish any forecasts on future earnings, nor do they endorse any third party forecasts. There are three firms that follow Benchmarq and they are ComVest, Prudential, and Needham. |
