Gordon:
An EPS of $0.02 surely does not differ much from $0.03. However, what hurting the share price is the forward projection of mid single digit growth for the next several Q's. In addition, the management indicated that the sales of communication products, which amounted to 57% of total revenue for the past Q, (primarily to Asia) have dropped significantly and are expected to be weak for next few Q's. The C6/C6+ winchip business, in stand alone basis, will not be profitable until the 3Q. The revenue that IDTI can expect from the Clear Logic is at most $2 M per Q for next few Q's. You got to ask where the earnings will come from. Finally, market's acceptance of C6/C6+ Winchip well into 1999 is not a sure thing. It is those concerns that are pressuring the stock price.
Having said the negative side, we need to look at the bright side of IDTI. First, unlike AMD, NSM, CY, and ISSI, IDTI made money and managed to grow the revenue in last Q. In contrast to the heavy insider sales in AMD, NSM, and CY in last year, IDTI's insiders put more than $8 M of their own money into the stock in last 12-15 months. If I remember correctly, the most recent buy was about 3 months ago at $13-9/16, which is higher than the current price. To a large extent, whether to sell/hold/buy depends how fast the business recovers. It is thus important to watch where insiders put their money. Let's pay some attentions on IDTI insider tradings. |
