To thread:
If you'll take a look at recent 13D filings, you'll see that the new investor (Magnum) has been constantly buying shares on the open market over the past couple of weeks. You might be upset that this new group dilluted us, but it's very nice to see them buying more shares on the open market.
These guys did their DD, and watching them gobble up shares every day is very encouraging (they bought more than 300K shares this past week, alone).
I'm not sure what DSPG's performance will be in the next 2-4 months, but over a longer period of time, I'm sure this is going to be a great investment. I'm looking to hold for about 12 - 18 months, and believe by than we'll be able to exit above the $40 mark.
The recent acquisition from AMD, will be accretive by Q4. I'm looking for earnings higher than $0.45 in Q4, and growing at a decent rate into 2000.
Regarding analysts revising their estimates for the coming quarters, I think we'll see some change soon. I'm looking for them to lower their Q2 and maybe Q3 numbers, while increasing their Q4 and year 2000 numbers. I also don't think we'll see any downgrades, and so hope to see the stock hang on to the mid teens in the near term.
The new acquisition from AMD will increase operating expenses (mainly R&D expenses), and will contribute revenues only by Q3. That's why I'm expecting lower numbers for Q2 and maybe Q3.
Current consensus estimates for Q2 are $0.32 per share, I think we'll see these move towards the $0.25 - $0.27 area (this, of course, is JMO, and based on my model).
However, once revenues from the new acquired product line start kicking in, the entire picture will change. Earnings will jump higher, and the company's growth rate will increase. The company will also be in much "hotter" industry segments, and this could mean higher PE's a little further down the line (buzz words like home networking, wireless communications and VoIP will appear more often).
All in all, the mid and long term future seem very promising.
Omer
P.S. Igal Kohavi was serious when he said he was afraid someone would try and take DSPG over. Just this past year, some group took over Komfi, a company founded by him and his son (traded in Israel). The guy knows companies can be taken over, and so he felt he had to do something to protect his company. I hope that his next move, would be to start another buy back program, using up the huge cash position. |
