Thursday, November 18, 2010

Boggling Reaction to Great Earnings Report from Spreadtrum Communications (SPRD)

Judging from the chart, I should have had a huge order waiting at the 50 day moving average for Spreadtrum Communications (SPRD).  Despite a stellar report (10 cent beat + increased guidance), and big move up in after hours yesterday, (and premarket today) the stock was crushed in the opening minutes of the regular session.  A truly boggling reception and one that makes you wonder which hedgie had a field day today collecting stops before driving the stock back up.  The stock is back up 10% off the lows of the days, but still... quite "eye opening" action.

Full report here.  Gross margins steady in the 44% range, and cash flow exploded.

  • Gross margin was 44.1% compared to 44.6% in the previous quarter and 39.0% in 3Q09.
  • Cash flows from operations were US$67.0 million, compared with US$35.2 million in the previous quarter and US$11.5 million in 3Q09.
Only fly in the ointment is some reduction in gross margin in the next quarter (42.5-43.5%).  Still should be on track for about $1.20 in EPS for year end 2010, so about 12x earnings for this exceptional level of growth.  


Via AP:

  • Spreadtrum Communications Inc., a Chinese company that makes semiconductors for wireless devices, said Wednesday that its third-quarter profit and sales surged, and it forecast fourth-quarter revenue above analysts' expectations.
  • The company said net income was $19.5 million, or 37 cents per share, compared with $630,000, or a penny per share, a year earlier. The company said excluding stock-based compensation costs it would have earned 43 cents per share.
  • Revenue jumped 151 percent to $96.2 million.
  • Analysts surveyed by Thomson Reuters expected the company to earn 33 cents per share on revenue of $92.6 million.
  • The company credited new products such as a chip that letsphones run three GSM SIM cards at the same time, which it said will boost sales outside China.

  • Spreadtrum said it expects fourth-quarter revenue to be between $118 million and $125 million, topping analysts' consensus forecast of $102.6 million.
From their report:
  • In the third quarter, we successfully launched world's first triple SIM in single chip solution, the SC600L7. The ability to run three GSM SIM cards simultaneously in a single mobile handset offers an attractive solution for multiple-operator-markets and business users, and has already garnered positive feedback from customers inSouth America, Africa and several South Asia countries.

Long Spreadtrum Communications in fund; no personal position

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