The problem is that the revenue growth was between 95-96.
Revenue has declined in 96-97. So, while this measure reflected 3 year growth rate, the market is reacting to last year's growth and what is expected this year. So, while it sounds great to get the award, it isn't going to prompt a lot of buying in the market, especially given current conditions.
SST will take off when their operating results improve. This will be driven by reducing line widths, introduction of new products (both at the low and high end), and the general recovery of the flash memory market. The new products and reduced line widths will start having some small effect this quarter, and should be a major factor by the end of the year. The flash memory market is a real wild card. It could turn by late this year, but 99 is probably the more realistic bet.
The biggest concern I had with the company was their planned purchase of land to build a new building. They have since cancelled this transaction. This will preserve cash and keep management focused on the business.
I love this stock. I like management, I like their market and I love their valuation. I think they have an outstanding risk/return tradeoff. But, given the current market conditions, I don't expect to make much money on this stock for at least six months.
Regards,
Archer |
