Actions Semiconductor Has Turned Around

| About: Actions Semiconductor (ACTS)

On May 11, 2012, I wrote an article highlighting 5 reasons why investors should buy Actions Semiconductor (NASDAQ:ACTS). When I wrote the article, Actions was trading at $1.70. Actions is currently trading at $2.70 or 58.8% higher than in May 2012. In this article I will take a look at what has happened and why I believe the current share price could still be a good entry point for new investors.

Actions Semiconductor has grown revenues the past two quarters as can be seen from the following table.

  Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 guidance
Revenue/millions $15.8 $15.2 $16.4 $18.5 $19.0-$21.0
Net income/millions $0.7 -$1.7 $0.4 $0.7 N/A

Here is a table of Actions' revenues and profits from the third quarter of 2011 to the second quarter of 2012.

  Q3/11 Q4/11 Q1/12 Q2/12
Revenue/millions $15.3 $12.3 $10.7 $12.6
Net income/millions $2.6 -$0.1 -$0.7 -$0.6

From these two tables we can see that Actions has grown revenues every single quarter during the past year compared to the year earlier period.


Actions Semiconductor reported the second-quarter financial results on August 8 with the following highlights:

Revenue $18.5 million
Net income $0.7 million
Cash $220.3 million
Debt $25.5 million
Net cash per share $2.83


Based on current market trends, the peak season for tablets, consumer electronics and portable media players is expected to begin a month later than usual. Therefore, the company expects revenue in the fourth quarter of 2013 to be higher than the third quarter of 2013, which is contrary to the company's historical seasonal sales pattern.

For the third quarter of fiscal year 2013 ending September 30, 2013, Actions Semiconductor estimates revenue in the range of $19.0 to $21.0 million and gross margin of approximately 34%.


On August 13 Actions Semiconductor announced the introduction of its new ATM7021 chipset.

Actions' ATM7021 chipset is the second generation dual-core product which supports the Android 4.2.2 Jelly Bean operating system. Actions Semiconductor expects ATM7021 to rapidly gain share at the expense of single-core CPU based SoC, and expects it to make a meaningful contribution to revenue once sales ramp up in the fourth quarter of this year.


The market for SoCs for portable media players and tablets is competitive and rapidly evolving. Increased competition may result in industry-wide price reductions or reduced margins. In particular, Actions Semiconductor faces competition from SoC platform providers such as ALi, AllWinner, Amlogic, Anyka, BestRely, Buildwin, Freescale (NYSE:FSL), General Plus, Infotmic, Ingenic, JieLI, MVSilicon, Rockchips, Vmicro and WonderMedia.


Actions is forecasting continued revenue growth in the third and fourth quarter this year. Actions has a book value of $4.12 per share and a net cash position of $2.83 per share. Actions has been buying back its shares since 2007. The company has invested approximately $47.8 million in repurchasing its shares. I believe the stock could be a good pick below the net cash of $2.83 per share.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in ACTS over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.