Trident Microsystems, Inc.(fka TRIDQ)

[eastunder]

When Will Trident's Turnaround Start?
By Anders Bylund | May 9, 2011 |

http://www.fool.com/investing/small-cap/2011/05/09/when-will-tridents-turnaround-start.aspx


Six months ago, the engines of media chip designer Trident Microsystems (Nasdaq: TRID ) started sputtering. The next quarter unveiled even deeper troubles that pointed to a weak consumer electronics industry in general.

And now the string of bad news continues as Trident's first-quarter report sort of impressed -- but second-quarter guidance only reinforced the doom-and-gloom message.

Even last quarter's good news was tempered by some bad mojo. Revenues turned out stronger than expected because some customers are stockpiling chips ahead of expected supply shortages over the summer. That explains Trident's lackluster sales view for the coming quarter.

After that, CEO Philippe Geyres promises that things will get better. You should expect "significant revenue growth and positive EBITDA in the second half of 2011," he says, because the product roadmap still looks strong and customers are starting to build products around Trident's newer chips.

Then again, we've heard that song before. Trident assured us that the spot of trouble two quarters ago was very temporary, and that the product roadmap would pick up the slack in short order. That didn't happen, or perhaps Trident's definition of "temporary" is a little bit different from mine.

While Trident resolved to rest on its laurels, fellow media-chip specialist Zoran (Nasdaq: ZRAN ) took the bull by the horns and redesigned its entire business model. A few months later, the company had not one but two competing buyout bids on the table, and it's now close to completing a merger with British wireless chip shop CSR.

Since that top-and-drop in late October, Zoran's shares have gained a market-beating 27%, while Trident fell by 60%.

Will Trident pull out of this downward spiral before it's too late, or is this stock going to zero? A five-star CAPS rating (out of five) says that plenty of investors still believe in Trident. My own "outperform" rating on the stock is hanging by a thread. I hate to end a losing CAPS pick and lock in my losses, because that's not how I built my all-star ranking. But I may have to go there with Trident in the end -- the company is running out of second chances.