SiRF Technology Holdings, Inc (SIRF)

[loridans]

Motley Fool on SIRF

A coal-black heart
First the market smacked SiRF Technology over the head with a shovel after it reported an earnings miss earlier this month. Then investors seemed ready to use that shovel to bury the GPS chip maker, too. Shares dropped nearly 60% in one day, after SiRF reported profits of only $700,000, compared to $9.1 million the year before. Worse still for the company was its anticipated loss of $0.04 a share in the first quarter of 2008, compared to analyst projections of $0.24 per share in earnings.

Shares sank amid the market's concerns that prices for navigation device prices would pressure SiRF's margins. Demand remains high for personal navigation devices, but competition is getting stronger, too. The news had a ripple effect as well: Shares of GPS maker Garmin (Nasdaq: GRMN), a customer of SiRF, fell 8% as a result.

Looking a little further into the future, you still see Research In Motion (Nasdaq: RIMM), Sony, and even General Motors needing SiRF's technology for their own product offerings. Skeptics may be premature in planning for the specialized chip maker's demise.

That's certainly the feeling over on CAPS, where All-Star investors like lBluttol and PopsDaniecki, with 98.95 and 99.52 player ratings respectively, feel that the sell-off is overdone. With a balance sheet that's still relatively strong, SiRF could make an attractive takeover candidate at worst. According to lBluttol, "I say that SIRF is an absolute screaming buy here if only for one compelling reason: SIRF is now dirt cheap and a prime takeover candidate."

Another All-Star, ddberg, is worried about the earnings miss and the company's regular practice of share dilution. Still, the stock's recent hammering makes its current price an attractive entry point:

Unless I'm completely missing something, or there's more going on than is publicly known, this sell-off seems highly overdone. Share dilution: bad. Falling short of estimates: relatively bad. But a 50% 1-day drop for a company still looking at double-digit growth across the board that wasn't significantly over-valued beforehand? Seems extreme.