Thursday, July 29, 2010

Bookkeeping: Restarting NetLogic Microsystems (NETL)

I'll edit this piece with information on last night's earnings from NetLogic Microsystems (NETL) a bit later in the day but it is being trashed on some amazing growth numbers.  I will give this one a chance because the thrashing is only taking it down to support rather than through support (thus far).  If it gets a lost worse later in the day or support is broken in the next few days I will be right back out.   So far the 50 day moving average has held.

I'll begin with a 1.7% type of position.  A break of $29 will most likely have me headed for the hills.

(edit 11:40 AM)

Via Investors Business Daily:
  • Fast-growing NetLogic Microsystems (NETL), whose chips help gear keep up with the Internet's exploding growth, continues to grow, but not as fast as some investors had hoped.  Late Wednesday, the company reported that its second-quarter sales skyrocketed 192% to $95 million from $32.5 million in the year-ago quarter. Problem is, analysts had expected $95.1 million. That slight miss was too much for investors worried about the pace of the global economy's recovery, and NetLogic shares were down about 2% after hours. (seriously now... that is $100,000 of a 'miss' on a $95M base - talk about silly)
  • Still, NetLogic said per-share profit minus special items more than doubled to 38 cents, far above the 32 cents analysts expected. And its guidance also topped views.
  • "They are the leader in their space (network processors)," said Betsy Van Hees, a Wedbush Securities analyst who rates the stock outperform, or buy. "They own the network search market."
  • NetLogic sells chips that run the routers and switches that power the Internet. Cisco is NetLogic's largest customer, accounting for some 30% of its sales.
  • "The network was already on its knees before these new devices came out," he said. "There has been an incredible proliferation of apps, hundreds of thousands. All of this is exploding exponentially. But the (network) products to deliver on this are not growing fast enough."
  • "Multicore is a rising tide," said Kumar, an analyst with Rodman & Renshaw. "From a technology perspective, NetLogic is way ahead of its competitors, and it's a fairly embryonic opportunity."  But Kumar also says the stock is "priced to perfection," and he rates it market perform, or hold.
  • Fewer than 10% of all network processors today are multicore, Jankov says, but the number will surpass 50% in five to 10 years.

  • The company expects per-share profit minus items of 36 cents this quarter on sales of $99.75 million. The consensus of analysts polled by Thomson Reuters was 33 cents and $97.7 million.
  • The Mountain View, Calif., company also upped its forecast for 2010 sales to $383 million. In April, NetLogic had forecast $377 million. It posted 2009 sales of $175 million.

NetLogic Microsystems, Inc., a fabless semiconductor company, engages in the design, development, and sale of processors and integrated circuits. The company offers multi-core processors, knowledge-based processors, 10/40/100 Gigabit Ethernet physical layer devices, network search engines, and embedded processors to develop systems used in the Internet infrastructure, including the enterprise, datacenter, metro, edge, access, and core networking markets

Long NetLogic Microsystems in fund; no personal position


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