Actions Semiconductor (NASDAQ:ACTS) operates as a semiconductor company in the People's Republic of China. The company designs, develops, and markets integrated platform solutions, including system-on-a-chips (SoCs), firmware, software development tools, and reference designs for the manufacturers of portable media players.
1. Revenue Increases 15% Year Over Year
Revenue for the first quarter of 2012 was $10.7 million, as compared to revenue of $12.3 million for the fourth quarter of 2011 and $9.4 million for the first quarter of 2011.
2. Shares Trading Below Net Cash
The company ended the first quarter with $33.8 million in cash and cash equivalents. Trading securities and marketable securities, current and non-current, were $187.8 million at the end of the first quarter. The company had $12 million in short-term bank loans and 68,986,835 American Depositary Shares (ADSs) outstanding at the end of the first quarter of 2012. This creates net cash of $3.04 per share.
3. Buying Back Shares
Since the share repurchase program commenced in 2007, the company has invested approximately $42.5 million in repurchasing its shares. As of March 31, 2012, approximately 18.3 million ADSs were repurchased.
4. Entering The Fast-Growing Tablet Market
Actions' ATM701x product family supports the latest version of the Android OS, also known as Ice Cream Sandwich. With the CPU core running up to 1.2GHz, high-performance 3D GPU, and a full spec 1080P video encode and decode engine built in, ATM701x is well-suited for the tablet market as well as other Android-based applications like game consoles, Internet TV boxes, and automotive applications. According to CEO Dr. Zhenyu Zhou:
We are enthusiastic about our recently launched ATM701x product family targeting the tablet market. The product has been well received to date. We commenced volume shipments in May with several customers and expect to begin seeing a contribution from this new product in the second half of 2012.
In addition to providing outstanding hardware capability, ATM701x's solution is also equipped with the excellent software capabilities to fulfill end user's needs. For example, the fast boot up mechanism can shorten the Android OS power up lead time from 50 seconds to 10 seconds. Additionally, the support of Adobe Flash will enhance the web surfing capability.
The Android OS had a 39% market share in global tablet markets in Q4 2011.
In an optimistic scenario, Morgan Stanley thinks hardware makers will ship 100 million tablets in 2012, up from 16 million in 2010.
5. Strong Outlook
For the second quarter of fiscal year 2012 ending June 30, 2012, Actions Semiconductor estimates revenue in the range of $12 to $13 million, with gross margin of approximately 36%.
Actions Semiconductor reported gross margin of 37.9% for the second quarter of 2011, and revenue for the second quarter of 2011 was $10.5 million.
The shares look cheap below the $3 level, which is the net cash of the company. I would be looking to buy the shares below this level. During the last five trading days the trading volume has been the highest it's been since January 2011.
Disclosure: I am long ACTS.