A very nice earnings report from old friend Spreadtrum Communications (NASDAQ:SPRD) late last week, along with a big upgrade in revenue guidance. Frankly I am surprised the stock only gained 6% (it was up some 12% in after hours Thursday night). The stock obviously stalled at an almost identical place as the mid February intraday high. This makes it tricky; one would probably like to buy in any 'gap filling' moment, and/or at a new high - currently it is sort of in no man's land.
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The main worry here is the product mix as China (and other emerging markets) move to 3G. Spreadtrum seems to be growing leaps and bounds in the older technology interfaces - but it's hard to know the competitive landscape in the newer generation build.
- Sales of wireless chips by unit volume rose 46% from Q3 for chips serving “2G” and “2.5G” cellular connections, the company said. Sales of chips for 3G connections rose 7% from quarter to quarter. Average selling price was down 2% from Q3 and down 26% from the prior-year period.
But for now that is an issue for another quarter as there seems to be enough global landscape in 2 and 2.5G, as the guidance raise was significant.
- For the current quarter, the company sees revenue in a range of $130 million to $135 million, beating the average $109 million estimate.
An interesting blurb by Needham as well late last week:
- Needham & Co.’s Quinn Bolton today reiterated a Buy recommendation on Spreadtrum and a $30 price target, writing that the ability of its chips to support phones with multiple “SIM” cards is helping Spreadtrum to expand in India, Africa and Latin America.
- Spreadtrum Communications Inc., a Chinese company that makes semiconductors for wireless devices, on Thursday reported fourth-quarter results that beat analysts' expectations as sales of its 2G and 3G chip products jumped.
- Spreadtrum said it earned $30 million, or 56 cents per share, compared with $1.4 million, or 3 cents per share, in the fourth quarter of 2009. Excluding one-time items, the company said it earned 61 cents per share. Analysts polled by FactSet expected 57 cents per share on that basis.
- Revenue tripled to $126.5 million from $42.3 million in the same quarter in 2009, topping analysts' estimates for $123.5 million in revenue.
- Fourth-quarter operating margins at the Shanghai-based company rose by 16 percentage points to 22.3 percent,.
- For full-year 2010, Spreadtrum earned $67.2 million, or $1.28 per share, compared with a loss of $19.3 million, or 43 cents per share, the year before. Revenue more than tripled, rising to $346.3 million from $105.1 million in 2009.
Disclosure: No position