RAK Rakon

[Toddy]

What was the news?

I don't understand alot about the technologies but here is a SIRF report.


Ahead of the Bell: Sirf shares plunge

Shares of microchip maker Sirf Technology Holdings Inc. plunged rapidly in premarket trading Tuesday after the company posted an 89 percent drop in fourth-quarter profit that led at least five analysts to downgrade the company.

The stock lost $6.87, or 42.2 percent, to $9.40 before the opening bell. Closed with bids at $6.55, last price $7.36

Thomas Weisel Partners analyst Heidi Poon downgraded the San Jose, Calif., maker of chips for global positioning systems to "Market Weight" from "Overweight" and cut her price target to $12 from $31.

"The shares would likely be range-bound until the demand picture improves or further traction" is seen in the wireless unit, where there is limited short-term growth, Poon said in a client note.

Poon noted Sirf's first-quarter guidance for a loss of 4 cents per share on revenue of $71 million to $77 million is significantly lower than her outlook for 26 cents per share profit on revenue of $95 million. Analysts polled by Thomson Financial expect, on average, profit of 24 cents per share on revenue of $92.4 million.

Soleil Securities Group analyst Peter Friedland cut his rating to "Hold" from "Buy" and his price target to $10 from $21, saying that Sirf should consider putting itself up for sale.

"At this point we believe the best outcome for Sirf is an acquisition by a larger semiconductor vendor interested in Sirf's GPS technology, strong patent position and leading market share position," Friedland said in a client note.

While GPS technology is quickly becoming a necessary item on cell phones, growth in that area has not been enough to offset commoditization in the portable navigation device market, Friedland said. Commoditization occurs when vendors each sell the same product, but there is no distinguishable difference between them, and prices are pushed lower.

New designs in the cell phone market and the uncertainty about business with Motorola Inc. also present uncertainty, he said.

Also Tuesday, Oppenheimer downgraded shares to "Perform" from "Outperform," Lehman Brothers moved its rating to "Equal Weight" from "Overweight," and Jefferies & Co. lowered its rating to "Hold" from "Buy."

[Hoop]

What was the news?

I have abbreviated this News item from CNN Money Click to read full news story.

SiRF Technology shares plummet amid 'uncertain' outlook, analyst downgrades
February 05, 2008: 01:37 PM EST


SAN FRANCISCO, Feb. 5, 2008 (Thomson Financial delivered by Newstex)
The San Jose, CA-based provider of software and semiconductors for personal navigation devices Monday posted a fourth-quarter profit of 28 cents per share, versus the mean 32-cent estimate of analysts polled by Thomson Financial.

Also a forecast an adjusted per-share loss of 4 cents to breakeven and revenue in the range of $71 million to $77 million for the first quarter.

Canning attributed the fourth-quarter results in part to 'late-breaking demand softness from two major customers.'

The San Jose, Calif.-based company's stock fell 53% to $7.60.

[tobo]

Glancing at SIRF's quarterly,
- 07 last qtr compared with 06 last qtr -
Revenue up from $74m to $100m
Gross margin $41m to $53m (down from 56% to 53% so only a smallish change)
Op Expses up from $22m to $36m (so something going on here)
(Therefore op profit down from $10m to $0.2m)

so could that be falling price (therefore falling margins) on huge volume increases? Fits with comment about "Commoditization occurs when vendors each sell the same product, but there is no distinguishable difference between them, and prices are pushed lower."

Does Rakon range suffer this issue to the same extent? How much of Rakon range is more specialised, less susceptible to this. (The French aquisition added low-cost product to range, did it not.)

[Toddy]

Hoop

Can you explain the difference between SIRF and RAK technologies. Are they selling into the same market.

[Hoop]

Hoop

Can you explain the difference between SIRF and RAK technologies. Are they selling into the same market.

Tobo looking at RAK latest results it looks like their margins have been reduced

Toddy I didn't know this company existed until tonight :o. I have been googling away here to get up to speed with SiRF.

From googling, SiRF product area is the making of state of the art semiconductor technology for GPS systems, engine circuit board, GPS software, multi function processors and low powered chips for GPS navigational systems..... from SiRF's Website.

RAK product area is quartz technology. The production of various crystal and oscillator components for various applications, GPS systems being one.
It seems Rakon overlaps into the Sirf's product area of the GPS market with news that RAK has developed the worlds smallest GPS receiver but generally it make different components to that of SiRF...but in saying this I am not so sure about C-Mac Micro Technology that Rakon purchased back in March 2007 though. It seems C-Mac make modules and chips too so they are in the semi conductor business as well but they produce for a wide range of industries not just GPS markets which SiRF seems to specilise in.

[redzone]

Sirf has certainly been cut off at the ankles....its dropped from $30 odd in the last few weeks....Rakon need to update the market .....this area they produce into is a bit like you need to be in first ...grab market share then sell the company...maybe just to many players now and profits slipping....did own Rak...and was going to buy back in but after reading about Sirf...will wait until RAK update the market....can see $2plus if market share slips

[mondograss]

RAK are much more specialised and although they've invested heavily in developing the consumer GPS side of things, they still make the vast bulk of their money from high-performance quartz for military and aero-space applications. They occupy a niche based on sheer quality and are unlikely to have their earnings seriously dented by softness in the consumer market. Might flatten off future earnings growth though if the softness lasts.

[redzone]

Its all about competion....sure they specialise in the area...but so do others and when our dollar is high like it is against the US....and imports are a lot cheaper for the US companies competing,margins on this side(nz) get hit.....will wait until result and forwarding looking report from company....lot of other gps producers have been smacked as well...we are part of the world now...im expecting the worst although RAK is a long way off its highs and may have suffered enough...buyer beware

[KJ]

P/E over 30 in the current market with dollar against it-unfortunately it can only go one way.

[redzone]

KJ.....correct