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Technology Stocks : California Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Elvis Jones who wrote (153)	1/23/2000 12:31:00 PM
From: Alan A. Hicks	Respond to of 168

CAMD beat expectations again. Guidance from the company last quarter had been for $10.5 -$11 million in revenues and making a small profit. I had been looking for $11 million and $0.02 to $0.03. So at $11.7 and $0.04, they beat the expectations of easily. (EPS would have been $.05 except for higher share count caused by employee/management stock purchases). Revenue growth was an impressive 37% year over year and 24% over the last quarter. Business seemed to be spread across their entire product line. Networking was their strongest growth market led by business from Nortel's optical switching products. Also there was very strong growth in CAMD's new power management chips that went into high volume production. These chips support energy-saving "sleep" mode in PCs, portable PCs and a variety of add on cards and peripherals such as modems, networking cards etc. CAMD said they continue to work with the major cell phone manufactures in Europe, U.S., and Asia. Cell phone design wins are still expected for later this year but there was nothing new to report yet. New design wins were again strong at 55 - three times what they were a year ago but off from the very strong 63 last quarter. Design wins translate into orders 6 to 12 months out so these wins should point to strong growth in the second half of calendar 2000. Orders for the quarter were around $14 million versus a $12 million rate last quarter. Guidance was given for $13-$13.5 million in revenues this quarter which would be a very impressive 52-58% year over year growth rate. So growth continues to accelerate. Gross Margins moved up nicely from 29.7% last quarter to 32.5%. Expectations are they will move up another 2 points this quarter and average 37% next fiscal (March) year as they trend towards CAMD's goal of 40%+ gross margins. R&D costs are expected to grow but drop as % of revenues. Sales and marketing will keep up with sales growth as they spend more in Europe to jump start growth there and get into major cell phone manufacturers. With revenue growth and better margins CAMD could be expected to report EPS of $0.07-0.08 for this quarter. With a projected growth rate of 40% to $60 million in March 2001 on 10% margins, EPS could be $0.50 versus breakeven for the current year. On trailing 12 months revenues of $38 million CAMD has reached 5 times revenues. With continued rapid growth of revenues to $60 million for March of 2001 the same 5 times revenues would translate into $25 per share. But, cell phone design wins could push the valuation considerably higher (RF MicroDevices-RFMD). Also continued success in analog ICs with integrated passives could also justify a higher valuation where analog IC companies sell in a range of 5 to 20 times revenues(Maxim, Linear, BurrBrown). My bet is CAMD will get cell phone wins later this year and their analog ICs with integrated passives will be a major success.