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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (58211)	10/16/2016 12:54:03 AM
From: Elroy	1 Recommendation Recommended By E_K_S Respond to of 78746

How much is proprietary technology vs commodity and do you see their margins shrinking? I don't think margins will shrink - for some reason (still unknown to me) there is very little competition in NAND controllers, so very little price pressure. As for how much is proprietary technology, SIMO says they need to work really closely with the NAND maker to make their controllers work well with their specific flavor of NAND. So that's sort of the "proprietary, non-commodity" aspect of the business. If some other company just makes an SSD controller without being closely involved with the NAND maker itself, I don't think they will do well and won't break into the supply chain. If SIMO and/or CY is first to a niche market w/ their products, they can maintain their high margins. Sounds correct, but in SIMO's case it's not quite right. Marvell had been making SSD controller for 4 or 5 generations, and SIMO entered that market 3 years ago, and has absolutely crushed MRVL and passed them to become the #1 merchant maker. SIMO has the top 5 PC makers as customers and 3 of the world's 6 NAND makers (Micron, Western Digital/Sandisk and Intel) as customers. So SIMO wasn't first to market, but they are still hitting the ball out of the park. The reason SIMO did so well against MRVL is that MRVL only makes the controller (hardware) and leaves the customization (firmware) up to the device manufacturer. SIMO makes a turnkey controller (hardware + firmware) package, and that approach won. Only the largest device makers have the tech staff to customize their own controller, with the SIMO controller they can just buy it and it works out of the box. MRVL has said that they are going to try to be more like SIMO (provide firmware customization service) going forward, so we'll see what happens in that regard. I don't really know why there are not loads of other semiconductor makers trying to make SSD and eMMC controllers. But there aren't. each company can grow their revenues w/ little to no significant added marginal production costs, generating higher quality EPS. Absolutley. SIMO has said that they have invested a lot in the relationship with their OEM NAND maker customers over the past few years, and now they can grow revenues without growing expenses much, so we should expect an expansion of operating profit margin if revenues continue to grow. I like other companies in this sector but many are at/near their 52wk highs Sure, but in SIMO's case it's absolutely deserved. They have reported 5 "best ever" revenue quarters in a row, and will grow 2016 revenues 50% more than 2015 revenues. It would be odd for them not to be near an all time high given those two facts.

To: E_K_S who wrote (58211)	10/17/2016 11:09:01 AM
From: robert b furman	3 Recommendations Recommended By E_K_S pgo-neil Spekulatius Read Replies (1) \| Respond to of 78746

Hi E_K_S, Cymer's new CEO is oriented to automotive. Once built into a new model - it locks you position for several years (until a redesign occurs). I've seen where the Broadcom purchas is expected to be a 30-40 million write off and this Q was supposed to be the end of planned fab utilization (left over from the spansion acquisition in Mar 2015). I'm hoping it gives a good opportunity to buy at a dip. Ther are tweo others in the semi equipment and test that have gone relatively below the radar: Brks (although up from last Q on a percentage basis) Brks has taken their cryogenic and robot expertise and innovatively redefined the pharma and bio sample storage - which has proven to be a fast growing sector within the pharma and university research sectors. They made a 250 million sale of a non key competency asset and reapplied the earnigs into new products and the big for them Biostorage acquisition. They pay 40 cents a share annually in dividends and have no bank debt. Lastly a small company named Cohu has consolidated the test handler industry over the last 5 years. Cohu's Delta division created and maintains a 95 percent market share. Five years ago they acquired Rasco the then # 2 maker of gravity feed handlers. They have since gained the # market share over Microtest as of last year. Almost 3 years ago they bought Ismeca a maker of turret handlers. When purchased they were the #1 market leader of the sector. Turret handlers are found in the LED manufacturing and now also utilize maching vission with in the Wafer level packaging processes. Collectively they have the largest global test handler owner base and have repeat sales of consumeables that often represent 40% of their quarterly revenue. Like Brks they have no bank debt. Cohu has had a painfully slow transition from manufacturing in Poway California to Malaaka indonesia. Over the last 2 years the transition has occurred and transition expenses have been ongoing but greatly minimized. Having consolidated their business , I believe they about to show renewed profitability. Cohu pays a 24 cent dividend and have been stuck in the 10.00 to 13.00 price range forever. With only 26 million shares outstanding and a grip on the entire sector Cohu has the capability of being a cash cow or an acquisition target for a bigger player in the semi equipment. The anti-competition call that has occurred between Klac and Lrcx - may well require the larger equipment companies to look down the food chain for smaller niche players. Both brks and Cohu pay a dividend and have no bank debt - they are growing companies that have grown the steady repeatable revenue model in such a way that the dividend is safe from the PC cycles. With a boost in industrial cyclicals both should be stellar debt free growth stories that pay a solid dividend along with a good growth story. ALL 3 are my favorites in the $10.00 - $13.00 value stories. As long as these stocks test the $10.00 range occasionally I been selling puts - that pay a 2-3 times premium vs the dividend paid. Hope I have not burdened you with my rant - but I like some of your other picks! Bob