CC:
As expected by most institutions, revenue guidance for Fiscal Year '99 was lowered from +20% to a broader range of 5-15%. This is being ultra conservative, and they stressed countless time that the business units are striving to meet previous guidance. The revision is largely due to the uncertainty of the sell through of several new key products, such as SBLive, Riva TNT (late quarter launch) and 5.1 speaker set.
This is clearly the "inflection" quarter, and a more definitive guidance can be given in the CC in 3 months.
CREAF has a book value of $9.31 with $4.50 in cash (This makes the stock ridiculously undervalued, and definitely a takeover candidate trading at so close to assets).
If you take a 10% revenue growth for the year, you come at the current estimates of about $2.20 for next year (this is about the same as revised estimates following June's warning). Note that 10% growth will likely be surpassed. Earnings growth could further be aided by reduction in shares outstanding.
Audio, currently at 34.4% of revenue, is expected to represent 40% next quarter. If this holds true, by my own calculations, this would mean a 10% increase in overall revenue assuming that non-soundcard revenue remains constant. Given strong ramp in speakers, DVD, and increased graphics with Riva TNT launch, revenue increase could be higher than 10% (which is also CREAF's official guidance for the quarter)
Asia is definitely the weak spot (-37.7% YOY), with Japan leading the way. Europe and North America are strong, however.'
The 8.3 Million write off was due mostly to moving speaker production to Asia, which will lower costs substantially, and allow for a faster ramp. CREAF also terminated certain communications businesses that were losing money.
DVD is seeing a surge in demand. CREAF said their only problem may be meeting demand in Christmas season (although my guess is that they are overplaying this somewhat).
CC highlight was without a doubt Sim's comment on the SBLive: "Just too damn good to miss!"
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These are the key points. There were also things mentioned that I assume people here to know, as far as OEM progress and general business goals. So if I missed anything here, please add to it, or give me your questions.
Brian |
