ALL PLEASE READ:
You can't just look at the bottom line # (which, after all, met expectations) and not look deeper within. Top line growth year over year was 93%, 61% this Q vs. year ago Q, and 7% over previous Q. Net Income was 45% greater than prior year, despite R&D doubling and the income tax rate more than doubling. R&D expense is not something one would penalize a company for. I think that the whisper #'s may not have taken the stepped up R&D into consideration. The company is also showing agressiveness in their pushing into the DVD & digital camera arenas, showing that they will be diversifying their product line - a smart move. They are acquiring technolgy. And how do they do it? With cash (no wonder where that came from) and with warrants to purchase at $20 dollars! Now is that confidence or what? And the selling company thinks that's a bargain.
The bottom line is that NMGC has and is proving that they are strong growing firm for which its' stock absolutely deserves multiples far greater than which is now bestowed (11 p/e? give me a break!)
For all who think that the 4Q #'s may negatively affect the price tomorrow, please read an excerpt from this article:
The Edge Feb 18 1999 4:08PM CST Archives...
Neomagic Corporation
by Kimberly Haley-Coleman
Senior International Markets Analyst
In a quarter which marks the completion of their second full year as a public company, Neomagic Corporation {NMGC:NASDAQ} today reported after the close of trading net sales for the fiscal year ended January 31, 1999 of $240.5 million, an increase of 93% compared to net sales of $124.7 million for fiscal 1998.
Net income for fiscal 1999 was$31.2 million, or $1.19 per diluted share, compared to net income of$20.8 million, or $0.82 per diluted share in fiscal 1998. Fiscal 1999 net income of $31.2 million reflected an effective tax rate of 34%, whereas fiscal 1998 net income reflected an effective tax rate of 15%.
In each of eight successive quarters the company has delivered higher revenue, higher profits, and higher market share, all of which combines for a high probability that the stock will gap up at the open Friday morning. The stock opened today at $14 a share and closed at $14.125 on about average volume of over 600,000 shares.
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