Color On SiRF Tech's Quarter: Looking For Cracks In Buying Interest

Several firms are commenting on SiRF Tech (NASDAQ:SIRF) after the co reported stronger than expected results and guidance:

- Morgan Stanley notes that excluding a lower tax rate, Q4 adjusted EPS were $0.01 above their $0.26 estimate and $0.02 above consensus. Revenue of $74MM easily topped firm's$70MM estimate and the company gave seasonal guidance (down 8%-12% Q/Q) for Q1. MSCO has revised their estimates higher (from $0.80 to $0.95 for 2007) as the advertising and price elasticity in the PND market was even greater than they noted in their November 28th upgrade report.

The strong Q4 results and SiRF's news flow at the upcoming 3GSM conference (February 12-15) is likely to keep a bid in the stock in the near term. However, the fact that competitive news flow is likely to continue to increase, Q1 should be seasonally slow, and the overall semiconductor industry business environment is challenged, as well as uncertainty about the timing associated with the share loss at TomTom will likely keep SiRF bound in a volatile $24-$30 range, in their view.

Maintains Equal Weight.

- RBC Capital is increasing their estimates and price target and maintaining Outperform rating on SIRF. The stock traded up about $4 in after-hours after the company beat 4Q07 estimates and guided better 1Q07 and 2007 revenue. The whisper expectations were lower than estimates due to share loss at TomTom.

The company guided impressive growth in spite of the strongest headwind of market share loss at its largest customer. This demonstrates that the company has broad based customer exposure and can continue to grow at a significant rate in spite of loss of a few sockets here and there.

Gross margins are still expected to be within its target model of 52% to 56%. There have been several claims and speculations about GPS chipsets prices falling from current $7 level to $2 suggesting significant decline in gross margins for SIRF. Q1 guidance and management's comment give the firm confidence that the company can maintain high gross margins though broad product portfolio offering. They continue to model at the high end of the target range.

They are increasing 2007 estimate from $1.06 to $1.18 (consensus was $1.00). Price target increases from $34 to $38 based on 32X 2007 earnings estimates.

Notablecalls: The problem with SIRF is that most firms already have Buy ratings on the stock. Following a 16% move in after hrs, I suspect tgt and est raises are not enough to keep the stock moving. There will be additional competition in the space in 2007 and SIRF does have huge customer concentration issues. I would be looking for cracks in buy interest after the open.

Take my calls with a pinch of salt. I've gotten some calls terribly wrong over the past couple of days. ATHR and GYI are probably the best examples of that. Somewhat tired, that's all. Hope no one got hurt.