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jason stuman / iphone killer
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By Travis Johnson, Stock Gumshoe, February 26, 2016

But further cynicism has to wait until we name the actual $7 company being teased — so who is it?

Thinkolator sez this is HiMax Technologies (HIMX)


If there’s a total of $10 worth of HiMax chips in each VR or AR device, just to make up a number that’s somewhere in the realm of possibility, and 20 million of them are sold, both of which are probably optimistic 2017-2018 numbers at the earliest, that’s $200 million in revenue. HIMX is a fairly small fabless semiconductor company, and that would make a dent in their income statement — but it wouldn’t transform them into the next Intel overnight.

That kind of thinking requires looking way out into the future (to be fair, much of Stutman’s big numbers in the ad are for five and ten years from now), and making a lot of assumptions about the growth of the market, the anticipated failure of their competitors, and a “survivor bias” look-back at the past so you’re only dreaming about winners like NVIDIA in graphics chips, Intel in processors or Qualcomm in mobile chips and not remembering the many losers and failed or superceded products in those categories over the last 30 years. “Virtual reality will be big” is a consensus thought now, but it doesn’t mean that the winners will be known before mass adoption really catches on… or that the stock will go up without interruption starting now.

https://search.yahoo.com/search;_ylt=A0SO81TEDapXwvEANRlXNyoA;_ylc=X1MDMjc2NjY3OQRfcgMyBGZyA3lmcC10LXMEZ3ByaWQDV0N4bm1FSlRTYVN6NmpUODdJMG9QQQRuX3JzbHQDMARuX3N1Z2cDNARvcmlnaW4Dc2VhcmNoLnlhaG9vLmNvbQRwb3MDMARwcXN0cgMEcHFzdHJsAzAEcXN0cmwDMzgEcXVlcnkDamFzb24lMjBzdHVtYW4lMjAlMkYlMjBpcGhvbmUlMjBraWxsZXIEdF9zdG1wAzE0NzA3NjI0OTA-?p=jason+stuman+%2F+iphone+killer&fr2=sb-top&fr=yfp-t-s&fp=1


http://senyo.test.wnd.com/markets/news/read/31621295/what%E2%80%99s_jason_stutman%E2%80%99s_$7_%E2%80%9Ciphone_killer%E2%80%9D_stock


http://www.stockgumshoe.com/reviews/technology-opportunity/whats-jason-stutmans-7-iphone-killer-stock/


“Virtual Reality transforms the world in ten years” thoughts out of your head and consider whether HiMax is getting new business today, and whether it is reasonably valued now and has some possibility of future growth to justify a better valuation over the next year or two. Right now, the business is driven by lower-end smartphones (touch sensors/LCDs) and high-end TVs as the “4K” upgrade cycle helps, they hope, to spur a recovery in large panel LCDs where HiMax has a good driver market share.

So where does HIMX stand in that regard? Well, there’s a pretty good analyst report from Credit Suisse here that gives some reason for optimism… but, again, that’s mostly because of the large panel display market. They give HIMX an $8.40 price target and they see them working their way out of the recent earnings/revenue dip (driven largely by the decline of the 3G phone market in China, where HIMX panels were apparently very popular) and getting back to 2014 numbers by 2017 — that $8.40 target is based on the stock trading at 21X their estimated 2017 earnings.

Which would be decent performance, to be sure — a gain of 20% plus from the current $6.80 or so. Of course, we need to look at these kinds of forecasts with a bit of skepticism — the same analyst at Credit Suisse had an overweight rating and a $15 price target on HIMX two years ago, in March 2014, when the stock was just about to fall off the cliff (it dropped from $14+ in March to $7 by May of that year in part because, in retrospect, they had run up to unsustainable levels due to Google Glass “story” enthusiasm). Back then, they anticipated that HIMX would earn 95 cents per share in 2015 — 2015 numbers aren’t out yet, but for the last four quarters HIMX earned 22 cents and analysts have very low expectations for Q4 (which will probably cut the year’s EPS down to 18-20 cents).

I don’t point that out to criticize Credit Suisse — HIMX has been popular for a while first as a growth name and, over the past year or so, as a possible value name after the drop, and most analysts have been pretty wrong about earnings as far as I can tell during the past two years or so of weaker revenues and shrinking gross margins.

Stutman and Credit Suisse are not the only ones excited about HIMX because of the growth potential in their microdisplay/virtual reality/augmented reality business, Morgan Stanley is also reportedly quite high on the stock following the VR enthusiasm at the Consumer Electronics Show, with a $9.50 target and as much as 18% of HIMX revenue in 2016 coming from augmented reality and virtual reality devices (mostly the former, presumably Google Glass and Hololens).

So there’s reason for optimism, perhaps, but there’s also the reality that a lot is riding on this emerging segment even if it won’t be a huge part of revenues right away — if the products don’t ship in high volume in the next few quarters, or if HIMX doesn’t have as much pricing power as analysts think, the weak margins could continue to pressure the stock unless the (much larger) Chinese LCD business (4K TVs or second tier smartphones) picks up quite strongly.

So far HIMX seems to have a good “design win” record in these emerging augmented reality devices and microdisplay technology (and do try to remind investors of that), but it’s really early days and that’s still probably a competitive segment given its novelty (Kopin is a smaller firm pushing into the area after working on LEDs for camcorders and similar stuff for a long time, there’s a SeekingAlpha writer who argues that KOPN is far ahead of HIMX on microdisplay) but there are undoubtedly others as well), and their other segments have even more competitive pressure possibilities.

Competition is the bedbug of semiconductor stocks — it’s always somewhere nearby, you often don’t think about it until you start itching, and investors often overlook just how much pricing pressure competition puts on suppliers who don’t have a sustainable patent lock on a business or a technological, reliability or brand advantage. As I’ve said before, it must be really tough to be in a business where the expectation is that your product’s performance increases dramatically each year as the cost is cut in half — but fabless semiconductor companies can also, when they have a hit product or a technological advantage, go from producing a million chips to producing 10 million chips and see their margins improve dramatically (fabless means they don’t own the fabrication facility — they just design the chips and sometimes invest in the specific tools and equipment for their chips at the contract manufacturer, which could be Taiwan Semiconductor or any of a few other chip foundries).

You can see the latest investor presentation from HiMax here, based on their third quarter. They will probably report their fourth quarter results, which I assume will be watched very closely (more for forward guidance than for quarterly performance), in about a month — but they did already preannounce, last week, that the results for the fourth quarter were slightly better than they had guided.

http://www.stockgumshoe.com/reviews/technology-opportunity/whats-jason-stutmans-7-iphone-killer-stock/

http://investorshub.advfn.com/Himax-Technologies-Inc-HIMX-11087/