less expensive "smartphones" is the pipe?
posted by gggl on the AXTI Yahoo mb: re-posting b/c: 1) some have said the key to PCS' success is sub $150, or less, "smartphones," in 2012 and beyond, I agree; 2) <<It is now abundantly clear from Apple as well as Qcom that there is a shortage of a very specific component that is "limiting" smartphone grwoth (sic). Likely Skyworks is the fabber of this component. However, this means that the rest of the components used to make smartphones are becoming much more readily available and even worse potentially stockpiling >> perhaps less costly smartphones are in the pipeline when this issue is resolved? Maybe good for PCS?
"Like I said I am outta here because people here ignore reality and then there are some that just want to censur me because they think they are doing other people a service.
First, the recent price declines and downgrades are no surprise at all. Take a look at the charts for TQNT and AVGO in the days prior to the TQNT CC, they clearly show major breakdowns of 2 of AXTI's major customers before the TQNT CC.
Then remember AXTI generates revenue from commodities and has at times large currency effects. In Q1 prices for Gallium continued to decline and the yen strengthened significantly, this means less revenue per volume on raw materials (a hit to revenue so likely low end of Morris's guidance) and of course the currency hit is straight off the bottom line. With Morris insisting on expanding his raw materials JV he has cut his usualy 3-4 sandbagging down to about 1-2 cents. That puts AXTI earnings guidance at significant risk to currency fluctuations which in Q1 will be a sizable. In short, given these known factors, AXTI is very likely to report revenue at the bottom end of the range and will likely miss on earnings.
That leaves only the hope of Q2 guidance for the short term rah rah story (long term you are fine this company produced 80 cents in earnings over a 4 Q stretch and can likely repeat that sometime relatively soon, i.e. within 2-3 years). It is now abundantly clear from Apple as well as Qcom that there is a shortage of a very specific component that is "limiting" smartphone grwoth. Likely Skyworks is the fabber of this component. However, this means that the rest of the components used to make smartphones are becoming much more readily available and even worse potentially stockpiling. In a semi environment that means pricing is deteriorating for those types of components, i.e. pricing pressure on AXTI.
This leaves us with a very weak Q2 and possibly Q3 on the revenue front scenerio. Further, a few more 7-8 cent quarters and you get projectable 30 cent type trailing earnings and at at 15 multiple that means $4.50 is generous.
For AXTI, which is in the Russell 2000 and HEAVILY affected by Russell 2000 ETFs (sorry money talks, BS walks), this posses a signficant risk of a boot from the Russell 2000 by the end of May.
I now predicted a Q1 miss on earnings followed by weak guidance. This will get you another nice move down (see Q3 results, pre and post). The risk is then if the Russell 2000 starts to turn south for the go away in May season that AXTI potentially could get the boot due to its valuation at the end of May. If that happens (actually the best thing for a long term player), index funds will unload AXTI presenting a great opportunity to load up and buy a stock that can produce 80 cents in earnings at a super discounted price.
I think the 52 week low is likely as low as it goes but if the stars align and AXTI's valuation is low enough to get booted form the Russell 2000 (requires sub $4 by 5/31), then $2 is in the cards and on massive flight, maybe even $1. Book value or cash won't matter. My bet is that if it gets the boot load up at $2."
AI
