Martin Vlcek
Contrarian, growth at reasonable price, macro, small-cap

PMC-Sierra Is Undervalued. New Product Launches And Lower R&D Will Boost EPS

PMC-Sierra, Inc. (NASDAQ:PMCS) is a "fabless" semiconductor company focused on transforming networks that connect, move and store big data. The company primarily offers products in storage, optical and mobile networks. During 2012, PMC suffered a heavy revenue drop, which threw the company into an operating loss. Since this sharp revenue drop in Q1 2012, sales have been falling much more mildly and have even slightly increased in Q2 2013 for the first time since the previous quarter. Net income and EPS have also stabilized, at a small loss of 2 cents per share during the past two quarters. Nevertheless, the company expects to start reporting positive EPS in the upcoming third quarter of 2013.

Investment thesis

With its...

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