I think these items in the 10Q are worth noting:
>>For the nine months ended November 2, 1997 and October 27, 1996, no one customer represented 10% of the Company's net sales.<<
- Good news!
>>Investments aimed at developing new products, including the addition of many design and applications engineers and related equipment, will continue. The Company plans to finance these investments with cash generated by operations and cash on-hand. In the past, the Company has relied on operating cash flows and selective use of bank borrowings to finance business investments.<<
- Bye bye banks; cash has to be applied somewhere. Great decision on where they should spend a portion of it.
>>The increase in revenues for the third quarter and first three quarters of fiscal year 1998 was due to continued improvement in the Company's ability to market and produce its products used in computer, communications, automated test equipment (ATE) and other strategic end-market applications.<<
- OK, I'll bite. What are the "other strategic end-market applications", and what growth potential do they offer?
>>The Company estimates that shipments made during the third quarter of fiscal 1998 were for use in the following end-market applications: 46% computer, 15% communications, 7% industrial, 14% military and aerospace, 5% for foundry services and 13% automated test equipment (ATE). Semtech estimates that approximately 40% of its net sales are derived from proprietary or limited source products.<<
- Sources of revenue are important to nail down, now we know.
>>Ongoing design efforts look to increase the number of proprietary parts due to their resilient demand and generally higher margin contribution.<<
- Thank you!
>>Shipments to customers located in the Asia-Pacific region were 32% of the
net sales for fiscal 1998's third quarter ... The Company estimates that two-thirds of sales into the Asia-Pacific region are to sub-contractors and offshore assembly operations of manufacturers that are supplying North American and European end-market demand.<<
- 1/3 of 32%(11%) is maximum impact extended Asian crisis might have on revenue stream, but that scenario has been shown to be unlikely to occur.
>>New orders received during the third quarter were more than net shipments,
resulting in a book-to-bill ratio of greater than 1 to 1.<<
- I love this number, and what it means. The myth, referred to as the "Asian Crisis", has just been exposed.
>Gross profit margins as a percentage of net sales was 48% in the third
quarter of fiscal 1998, compared to 42% in the same period last year. The improvement in gross margins is attributed to higher contribution from ATE, TVS and other higher-margin product lines and increased operating efficiencies associated with higher shipment levels.<<
- Edge, and ..... what else? Military applications, so remember to support your armed forces.
>>The Company has also pursued design capabilities in other remote locations and intends to continue to take steps to attract and retain technical talent worldwide.<<
- Here we go again with the mystery game, now what?
>>Headcount additions have also been made on applications and strategic marketing talent needed to support growth objectives.<<
- I love the lexicon and double-speak of military programs.
>>Added headcount and overall support of development will continue to result in higher research and development (R&D) spending levels.<<
- R&D is the ticket to increasing revenues and higher profit margins.
>>The Company has approximately 30 technical persons dedicated to research and development activities. Additions to design as well as field applications support have doubled the Company's resources in these areas over the last eighteen months.<<
- No doubt the effect of this is beginning to be realized. Hiring additional engineers, application designers, and marketing personnel testifies to the benefits obtained in doing so.
>>Stock Options Exercised NOV 1997 - $1,609M<<
>>Stock Options Exercised OCT 1996 - $135M<<
- I don't blame the employees at all, in fact they should be thanked. They have done a great job and deserve it, this explains a portion of recent selling, and it suggests more shares have likely entered the hands of investors with positions at higher price levels.
I like what I see, and the picture looks even brighter when looking into the future. Any thoughts on these items, or any insight on benefits that lie hidden in the current company fundamentals? Thanks for the link Dave :o)
Regards, JB
P.S. I selfishly suggest we're overdue for one of those classic reviews Todd Wiener is known to dish up. I'm sorry (well, sort of) Todd :o) |
