All: (S) MMCN Fundamental Analysis (Very Long Post):
How much does the company sell and earn?
Investors need to know how much stuff or services a company sells, and how much of that total it keeps as income (or profit) to grow its business or return to shareholders. The more of each, the better. In general, look for companies that sell and earn more than peers.
MMC one-year sales: $43.2 Mil.
Difference from the average for the Networking & Communication Devices group: -95.66%
MMC one-year income: $6.3 Mil
Difference from the average for the Networking & Communication Devices group: -90.25%
How fast is the company growing?
It may not be fair, but public companies are judged by investors more on their sales and earnings growth rates than on the absolute value of their sales and earnings. Look for companies that consistently grow faster than peers.
MMC one-year sales growth: 149.70%.
Difference from the average for the Networking & Communication Devices group: 129.10 pct. pts.
MMC one-year income growth: 1,000.00%.
How profitable is the company?
Investors prefer companies that increase profit margins -- the percentage of sales that they keep -- every year. This is accomplished either by lowering expenses or raising prices. Look for companies that consistently find ways to squeeze more profits out of sales than their peers.
MMC one-year net profit margin: 14.6%
Difference from average for the Networking & Communication Devices group: 8.2 pct. pts.
MMC has no debt.
How has the stock performed?
Investors need to know how a stock has performed relative to all other stocks. Generally they attempt to hold the market's top-performing securities -- those that have done better over the past year than the majority of stocks in their industrial group and all stocks in our database. Look for a positive trend in the 12-month, 6-month and 3-month periods.
MMC price change in past 3 months: 6.8%.
Difference from the average for the Networking & Communication Devices group: -81.80 pct. pts.
Percentage of all stocks that MMC outperformed: 36%
MMC price change in past 6 months: -57.1%.
Percentage of all stocks that MMC outperformed: 8%
MMC price change in past 12 months: -15.1%.
Percentage of all stocks that MMC outperformed: 45%
How has the stock performed?
Investors need to know how a stock has performed relative to all other stocks. Generally they attempt to hold the market's top-performing securities -- those that have done better over the past year than the majority of stocks in their industrial group and all stocks in our database. Look for a positive trend in the 12-month, 6-month and 3-month periods.
MMC price change in past 3 months: 6.8%.
Difference from the average for the Networking & Communication Devices group: -81.80 pct. pts.
Percentage of all stocks that MMC outperformed: 36%
MMC price change in past 6 months: -57.1%.
Percentage of all stocks that MMC outperformed: 8%
MMC price change in past 12 months: -15.1%.
Percentage of all stocks that MMC outperformed: 45%
Where is the stock's support and resistance?
Investors should note the average prices at which a stock traded over the past 50- and 200-day periods. These "moving averages" tend to provide a floor, or support, for stocks trading above them and a ceiling, or resistance, for stocks trading below them. Stocks that sink below support are in danger of further weakening; stocks that rise above resistance have a shot at new highs.
MMC current price: $13.75
First support for MMC: $12.04 (50-day moving average)
First resistance for MMC: $19.74 (200-day moving average)
What's the best guess for the stock price in 1-2 years?
Investors fix targets for most stocks by estimating future earnings per share and then applying a price-to-earnings "multiple", also known as the P/E ratio. Companies with the most consistent earnings history or strongest growth prospects receive the highest P/E multiples. We calculate price targets for the current and next fiscal year by applying the stock's current multiple to the average professional analyst's estimate.
Valuation using MMC's current multiple (P/E):
MMC current price: $13.75
MMC current multiple (P/E): 72.40
MMC average 12/1998 estimate: $0.27
MMC low 12/1998 estimate: $0.25
MMC high 12/1998 estimate: $0.28
MMC average 12/1999 estimate: $0.44
MMC low 12/1999 estimate: $0.37
MMC high 12/1999 estimate: $0.48
What's the best guess for the stock if it were valued like its peers?
Investors often come to believe that a stock is undervalued or overvalued compared to other stocks in its industrial group. To calculate an alternate target price for the current and next fiscal year based on those beliefs, investors can apply the average PE multiple for a company's industrial group to the average professional analyst's earnings estimate for the company in those periods.
MMC current price: $13.75
Networking & Communication Devices group current multiple (P/E): 158.60
MMC average 12/1998 analyst estimate: $0.27
MMC average 12/1999 analyst estimate: $0.44
How certain is the price estimate?
Investors estimate the level of unanimity about a stock's prospects among analysts by calculating the range between the most optimistic and most pessimistic estimates.
Average number of analysts covering MMC: 6
MMC analysts' high/low spread: 21%
MMC analysts' confidence: Medium
Catalysts:
Recent News:
SAN JOSE, Calif.--(BUSINESS WIRE)--Dec. 14, 1998--The Fabless Semiconductor Association (FSA) recognized MMC Networks MMCN as an Outstanding Financial Performer at the FSA's Anniversary Dinner Celebration on Dec. 8, 1998. The event attracted over 900 of the industry's top executives.
The FSA recognized those companies that doubled their revenue or net income year-over-year, for the twelve-month period ending September 1998. MMC Networks was one of the winners of the Outstanding Financial Performance awards.
Management Discussion (SEC Filings):
Research and development expenses for the nine months ended September 30, 1998 were $10.7 million or 29.9% of revenues, as compared to $5.4 million or 37.9% of revenues for the nine months ended September 30, 1997. The increase in research and development expenses from period to period was due to increased expenditures for the development of new products and additional personnel. The Company expects quarterly research and development expenses, net, to remain relatively constant in absolute dollars in the fourth quarter of 1998.
Admin Expenses:
The Company expects quarterly selling, general and administrative expenses to remain relatively constant in absolute dollars in the fourth quarter of 1998.
Customer Concentration:
For the three months ended September 30, 1998 a single customer, Cisco Systems, Inc. ("Cisco") accounted for 56% of total revenues. NOTE: If Cisco dosen't succeed, MMK will not succeed.
Competition:
The data networking and semiconductor industries are intensely competitive and are characterized by constant technological change, rapid rates of product obsolescence and price erosion. The Company's PS1000, ATMS2000 and AF5000 product families compete with products from companies such as Texas Instruments Incorporated, Lucent Technologies, Inc., PMC-Sierra Inc./Integrated Technology Ltd., Galileo Technology Ltd. and I-Cube, Inc.
Legal Proceedings:
FORE Systems filed a patent infringment against MMK in 4Q 97. MMK settled the suit 6/98 with a $1.3M charge to operating income for legal expenses. In accordance with the settlement, the Company agreed to pay a settlement fee and entered into a patent cross-licensing agreement pursuant to which the Company and FORE granted each other perpetual, with certain exceptions, and fully-paid licenses to certain patents held by them.
Competition:
Adaptec, Inc.
Advanced Electronic Support Products, Inc.
Apex PC Solutions, Inc.
Ascend Communications, Inc.
Cybex Computer Products Corporation
Computer Network Technology Corporation
3Com Corporation
Cabletron Systems, Inc.
Cisco Systems, Inc.
Castelle
Digi International Inc.
Digital Link Corporation
Equinox Systems Inc.
FOCUS Enhancements, Inc.
FORE Systems, Inc.
Interphase Corporation
Interface Systems, Inc.
Integrated Technology USA, Inc.
Madge Networks N.V.
MicroFrame, Inc.
Meridian Data, Inc.
Newbridge Networks Corporation
Netrix Corporation
Network Equipment Technologies, Inc.
Neoware Systems Inc.
ODS Networks, Inc.
Perle Systems Limited
Pericom Semiconductor Corporation
RSI Systems, Inc.
SBE, Inc.
Silicom Limited
Standard Microsystems Corporation
Spectrum Signal Processing Inc.
Sync Research, Inc.
Network Connection, Inc.
Tricord Systems, Inc.
Visual Networks, Inc.
Xircom, Inc.
Xybernaut Corporation
Xylan Corporation
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