QuickLogic Corporation (QUIK) provides a unique opportunity for investors before the analysts and public learn about QUIK's new customers that are about to make the company and us common shareholders very rich. The reason why many investors have not discovered QuickLogic is fourfold: 1. Few investors listen to and analyze management conference calls; 2. QUIK has non-disclosure agreements with customers; 3. SEC regulation FD (fair disclosure) limitations; and 4. Management's desire to keep their credibility by understating their achievements and expectations.
The risks are now very small given the progress in product development and the traction the company appears to be gaining with its brand new products. This article is intended to provide retail investors information ahead of the crowd. QUIK has the potential to give us Google- (GOOG) and Apple- (AAPL) like returns because the products that QUIK is now manufacturing will be absolutely necessary for the future of all major handheld device manufacturers to stay competitive.
The notorious Apple vs. Samsung (SSNLF.PK) case should cause stronger and faster adoption of QUIK products to avoid Apple patent infringement problems because the recent $1.5 billion verdict is based upon Apple's convincing claim that Samsung stole not just aspects of the IPhone's functions for some of the Korean manufacturer's smartphones, but the look and feel of it too. QUIK will benefit because QUIK products can solve patent design problems like function, how the screen looks, works, feels, and size etc.
QUIK's visual, performance and battery enhancement solutions will give OEM manufacturers a competitive advantage. The iPhone 5's release in October of 2012 will set-off a race to adopt QUIK's game changing innovative products.
Quicklogic pioneered a new class of semiconductors called Customer Specific Standard Products (CSSPs). These chips are customized, unique, very low power consumption, programmable silicon chip sets. This intellectual property was developed by Quicklogic as well as licensed from third parties. By incorporating programmable CSSP designs Original Equipment Manufacturers can customize devices, rapidly, by cheaply adding totally new features.
A critical turnaround for the company was marked at the beginning of 2011 when Mr. Andy Pease was promoted to CEO. He came to QuickLogic after leading worldwide sales at Broadcom Corp (BRCM). As CEO he accelerated the development of the company's next family of processors known as ArcticLink III-VX. QUIK customers sampled these chips in the first quarter of 2012.
QUIK is a high technology leader that develops and markets low-powered silicon chips. The company's fundamentals are growing stronger:
1. QUIK had $26.9 million in cash on the balance sheet at the end of the second quarter 2012;
2. QUIK's gross margins are approximately 60% and will become better with growing new product revenue.
3. 23% of market capitalization is in cash.
4. 44 million shares outstanding with float at 36 million.
5. Management owns 8.17% of the common stock.
6. % change in funds owning stock 132% and growing.
7. 2 quarters of increasing funds ownership.
8. Market capitalization $130 Million.
9. Debt is minuscule at 1%.
10. Investor's Business Daily's proprietary stock indicators are also flashing positive:
IBD SmartSelect® Corporate Rating is A- indicating heavy Accumulation/Distribution.
11. Investor's Business Daily also measures the relative strength of Quick's stock price as performance 82 out of a possible 99 ranking.
QUIK completed design and development of new product families going into mass production at the end of 2012. The company's lead product called Visual Enhancement Engine (VEE) was introduced in 2008 as a stand-alone chip with limited applications. However, few investors realize Quicklogic has overcome the design issues initially presented by VEE. In December, 2011, Quicklogic introduced the first display bridge chip in the ArcticLink III family to support the industry standard known as MIPI. This bridging capability solved a major integration issue for many potential customers. On September 11, 2012, Mr. Owen Bateman?Director of Sales, Quick North America & EMEA?confirmed that "the VEE and DPO technology can be implemented into the display path for any device/phone that requires a MIPI, RGB or LVDS connection to the display. QuickLogic VEE/DPO technology connects directly to an iPhone compatible device is the Pop Video "Pico projector" made by micron." The ArcticLink III-VX family can support all OEM design preferences and requirements for smartphones, handsets, tablets, televisions, laptops, and Pico Projectors (stand-alone and embedded).
Despite integration issues, Quicklogic VX2 RGB-to-RGB display interface found a home in Pico Projectors. QUIK also guided that a second OEM Pico Projector will begin shipping in Q4 2012. General Instruments is using Micron Technology (MU) PoP Video reference design for its new IPICO projector.
QuickLogic has two smartphones and one tablet in the market using its ArcticLink II-VX platform. QuickLogic's VEE and DPO technologies are integrated into BenQ's R100 tablet reader, allowing an extended battery life without sacrificing viewability. The Vega 5 from Pantech uses QuickLogic's VEE HD+/DPO HD+ technologies and the Kyocera DIGNO uses the integrated bridge function. QuickLogic has a third smartphone, which is scheduled to move into production during the second half of 2012. It will use the bridge function as well as VEE/DPO. The fact that QUIK's new VX3 chip is "bridging capable" truly opens an entirely new market where the bridge function means huge revenues coming for QUIK. In recent conference call CEO Andy Pease revealed additional design wins using new chips would be shipping soon:
We believe that we will see Arcticlink III VX revenue in Q4.
QUIK started working on the next generation ArcticLink IV family of processors to stay ahead of key industry reference designs. In recent financing, Quicklogic disclosed that it "may also use a portion of the net proceeds for licensing or acquiring intellectual property or technologies to incorporate in our products." Undoubtedly, CEO Andy Pease intends to keep up with OEM customer needs to make sure the missteps of the past are not repeated. In the July, 2012, conference call he also stated:
We have initiated evaluation and design activity with a number of Tier 1 and Tier 2 smartphone and tablet companies around the world. We believe several of these engagements will lead to initial production shipments in Q4 of 2012.
Clearly, QUIK's customers are in the process of testing, designing, and producing smartphone and tablet products based on Quick's ArcticLink III VX family of chips:
2. ArcticLink II CX-based media platform delivers a superior user experience through faster USB sideloading and offloaded management of DRM-protected content. QUIK provided ArcticLink II CX samples to potential customers in April, 2012, and is scheduled to go into production in the third quarter, 2012.
3. In June, 2011, QuickLogic released the Jupiter reference platform from this chip that allows customers to plan their product development before the release of the ArticLink II CX sample. Texas Instruments (TXN) and their Sitara processor Ecosystem have led to a catalog strategy incorporating QUIK's CX based Jupiter reference design in less than one year.
4. QuickLogic and CertiVox have developed multiple products expected to be very profitable soon.
5. Even Google, Nokia and Apple with the new higher processing power of their operating systems could use the outstanding benefits offered by QuickLogic's innovative products.
Mr. Andy Pease, CEO, also said in the recent conference call, "We believe the CX platform delivers higher design flexibility, broadens the range of applications we can address, and strengthens our value proposition. We believe the CX platform is ideally suited for a wide variety of applications spanning all of the existing target marketed segments, including the emerging machine-to-machine (M2M) market."
QUIK has strengthened its balance sheet to financially manage the huge production orders received for QUIK's brand new ArcticLink III-VX and ArcticLink II-CX processors. In the July 2012 conference call, management hinted technology acquisitions or licensing deals are being contemplated to complement its product offering. QUIK continues to demonstrate OEMs, Tier 1, and Tier 2 silicon companies such as Qualcomm, Nvidia (NVDA), Qualcomm (QCOM), Samsung Electronics Co., Ltd (Korea SE Exchange), Texas Instruments and Arm Holdings Plc (ARMH) Texas Instruments, and others have an advantage using QUIK's innovative technologies.
QuickLogic at $2.95 per common share offers investors an excellent opportunity to earn significant returns in the next couple years. The fundamentals and the stock chart's technical indicators are now evidencing an inflection point and a very positive trend. QUIK's strong price and volume rally in the last 9 days is reflecting the clearly improving underlying fundamentals of the company. The news about the company's fundamentals is getting better every day.
The stock price will continue to move higher in this new price uptrend. Now is an excellent time to add to your stock positions before the momentum of the company's fundamentals is discovered by Wall Street analysts by the fourth quarter of 2012.
Disclosure: I am long QUIK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.