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Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: Sharck who wrote (21560)	5/9/2001 11:53:30 AM
From: tom ablett	Respond to of 37746

Trader's Edge: Pixelworks (PXLW) 04-May-01 11:14 ET [BRIEFING.COM - Robert J. Reid] As you probably know, it has been a tough environment for the semiconductor sector lately. Many have warned once or even twice during Q1. Some refuse to provide any guidance whatsoever on their conference calls, and those that do paint a grim picture. Briefing.com found a chip company that grew Q1 sales sequentially by 18%, expects flat sequential growth in Q2 and 11%-13% sequential growth in Q3 and Q4. It's impressive in two respects: 1) company is confident enough to provide specific guidance, which has been almost non-existent by others and 2) the numbers are impressive relative to other chip companies. Background Pixelworks (PXLW 23.99 -0.11) is in a hot area for chips -- flat panel monitors, advanced display devices, multimedia projectors, and high-definition televisions. Last year, the company extended its product offerings into lower cost flat panel monitors. To help solidify its position, in January, the company purchased Panstera, which is developing a broad line of mixed signal chips for mass-market, XGA-resolution LCD monitors. Granted, the valuation is high as the company is expected to earn only $0.32 this year, but the stock is still well off its $51 high since going public last May. With a huge run in the chip space, you may want to wait for a pullback in the shares, but Briefing.com recommends the $20-range as an attractive entry point. Key Points Strong Growth: This analyst is not a big fan of projections from research companies, but we have also heard strong expectations for flat panel display monitors from multiple sources. DisplaySearch estimates that the market for flat panel monitors will increase from 6.3 mln units in 2000 to 46.2 mln units in 2005, a compound annual growth rate of 49%. Sales Growth Impressive: In 2000, Pixelworks sales jumped to $52.6 mln, from $12.8 mln in 1999. The company recently reiterated its 2001 sales forecast in the upper-$90 mln range, for an 80% growth rate. Margins Improving: The company expects gross profit margins to grow from 43.4% in Q1 to 44% in Q2 and 45%-46% in the second half. Future Products: PXLW also developing products for emerging markets including Internet appliances, electronic devices designed to access and display Web content. Company committed to research & development as R&D expenses were $10.2 mln, $4.8 mln and $1.4 mln in 2000, 1999 and 1998, respectively. Also, as of the end of last year, the company had more employees in engineering than sales -- 46 vs 43. The company has 109 employees total. Jolt: Analysts are most excited about Pixelworks and a subsidiary of Toshiba working together on a product which is expected to drive Pixelworks' next-generation chip code-named Jolt, an upcoming system-on-a-chip semiconductor with embedded software that couples industry-leading ImageProcessor technology with an embedded browser to power a new class of Internet-enabled media appliances. The new TX79 processor core is a powerful processor engine designed for new digital consumer electronics and networking applications. Widely Accepted: Pixelworks sells to 9 of the top 10 computer monitor brands and 11 of the top 15 television brands. Overall, the company has more than 75 customers, including Compaq, Dell, Hitachi, InFocus, NEC-Mitsubishi, Samsung, Sony and ViewSonic. Strong Balance Sheet: Pixelworks has a solid balance sheet with over $2 per share in cash/short term investments and zero debt