C-Cube needs to have revenues almost $3M-4M higher, this Q over last. Expenses increased in R&D and SG&A. The TV/COM engineers cost $7K per Q for a full Q. Did C-Cube start paying on Jan. 1? Jan. 21? They need to hire, let's call R&D up a million. That would reflect restrain.
SG&A were up $1.5M, Q over Q, last Q. I think that was part of the new China offices for Divicom, and the new President of Chips. Another at least 1M this Q. Divicom's Hong Kong office cost an extra $700K last year, in the Q the had the PR.
To pay an extra $2M in expenses, and report $.31, they need ruffly $4M(or higher margins). Can they sell $4M more?
Divicom was projected flat. No biggies this Q to change that.
Encoders grow for the first time in over 1 year. The drag was this great single chip encoder, sold for 1/5 to 1/7th the price. It may only add a few hundred K, but that's a change.
Settops grew. They dropped a bit last Q, But they grow in Q1. The drop-off was due to AViA@TV. Product transition. Add at least $2M.(slow time of the year)
Now the tricky part is VCD/DVD. They lost some, but not all Creative Business this Q. The rest may go next Q. DVD player OEMs needed to restock the shelves after Christmas, and China started taking volume chips. DVD grew.
VCD? VCD should have grown, but market share and consumer demand are questionable.
If VCD surprises, C-Cube makes more then expected. If not, $.31.
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