Saifun Reports Margin Contraction (SFUN)

| About: SouFun Holdings (SFUN)

Flash memory company Saifun (NYSE:SFUN) -- which made an IPO in November -- reported Q4 2005 numbers after hours, with revenue of $16.7M, gross profit of $12.9M, and operating earnings of $7.3M. Those give gross margin (gross profit/revenue) of 77%, OP margin (operating earnings/revenue) of 44%, and OOP margin (operating earnings/gross profit) of 57%.

All of those are contractions from Q3 2005 values of 83%, 58%, and 70%, respectively. Top line contraction in a growth company is never a good thing (it's about 7% Q/Q in this case - $16.7M/$17.9M). With that contraction we're not going to pay a premium for them, but might pick them up if they get discounted.

Given the politics, we might just wait till the beginning of April to see what happens with Iran and the nukes.

SFUN 6-month chart:

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