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Technology Stocks : Silicon Image (SIMG) -- Ignore unavailable to you. Want to Upgrade?

To: scots40 who wrote (39)	10/19/2000 2:18:45 PM
From: Asymmetric	Read Replies (1) \| Respond to of 42

My Analysis of SIMG, and Dain Wessel Report I still do believe the technology of SIMG is sound. My understanding of SIMG is that they have solved a very basic problem confronting the computer industry regarding ability to transfer data at very, very high rates, or ie, bandwidth. The first application of their technology is for digital displays, or in this case the flat panel display (FPD) market. Traditional CRTs are analog, and so are older generation FPDs which is where GNSS specializes. They take digital output from computer and convert to analog signal which is then applied to the "gun" of the monitor or active liquid crystal matrix of the FPD. But FPD's are inherently digital, and the fast and dirty solution is to just add another converter (analog back to digital) and apply to FPD. The clean solution is to keep signal digital through-out. However to make a graphic display requires lot's of info, and hence lots of data and hence lots of bandwidth. This is where SIMG's technology comes into play, and their solution is called Panellink. Their transmitter chip interfaces the video graphics card and the receiver chip goes into the monitor. The receiver would be incorporated in with a monitor CPU making it "smart". Having a "smart" digital monitor will also allow them to make the monitor do more, have better picture quality, reduce jitter, etc. So not only is it technically better, but digital monitor will be able to do more graphic wise. Also because the solution is a serial transport mode that can go over pairs of copper wires, you can have a longer cable between the CRT and the monitor, so you can put the flat panel more places/farther away. Stick a keyboard there (distance not a problem there) and you can start to do some real cool things with setups and displays. This is the DVI market or digital video interface, which SIMG basically gave away the technology and which the industry has standardized on. However, they hold the patent on TDMS, the "physical link" that the data actually is transported on, and chips incorporating their technology and spew out data at the physical or layer one layer is where they make their money. Another bottleneck is the transfer from the hard drive to the motherboard. With motherboards and CPU's all getting much, much faster, the I/O (input/output) there is now a problem. Since SIMG is at a very basic level, a I/O technology, or a data transport technology, this is then yet another market open to them that they are now just pursuing via their ATA link product which just being sampled. Another market their product addresses via their HDCP product is the problem with copy protection of digital content. Their purchase of DVDO was a smart strategic purchase as DVDO played a key role in the emerging standard of HDCP that was approved by the Motion Picture Industry. My understanding is the HDCP product is technically superior to the present mode of copy protection out there. The application of SIMG's HDCP product applies not only to the DVD area/players, but also to any broadcast or/ie transfer of digital content, hence the deal with Echostar to incorporate their technology in their satellite set-top boxes. SIMG is an early stage company, but the markets their technology addresses is very, very large and they don't have competition at this point in time. Lehman Bros projects triple digit growth for company over next several years. Credit Suisse was also very bullish on company. I was on the early side, but to make the big gains, you have to get in early when you consider the stock cheap in order to ride it up. Obviously the caveat remains: do your own due diligence and I have been wrong in the past. So remember I'm as good at losing money as the next person and am proving it right now. Also Included is Dain Rauscher report Dain Rauscher Wessels DRW maintains its strong buy rating on SIMG however they do lower the 12 mo target to $31 from $44. Here are some highlights: Softness in PC's held to the host side. Receiver chips for display continue to grow strongly. The co expects significant momentum to set in the host side business going into the 1st qtr. 01, with continued momentum through 01. Current DVI penetration is roughly 7% with expectations of 20% by y/e. The co believes blended adoption across these markets (total market of 500 million units including 120 mil hosts, 130 mil CRT, 14 mil flat panel, 27 mil portable pc's, 60 mil set-top box and DVD players as well as a small no. of HDTV's) could be 15% by 01. We have assumed SIMG captures a modes 1/3 of this market, a conservative assumption considering the lack of competitive pressure. SIMG is the only co with HDCP- compliant components. SIMG is the only co with a completely integrated solution for Serial ATA links and given the ease of transition to Serial ATA standards, we expect a significant ramp in shipments of these parts in the 2nd half of 01, yielding a significant upside to our revenue projections. Regards, Peter.