Trident Gets Trimmed (TRID)
Trident Microsystems, which is one of the leaders in making integrated circuits for LCD and flat-panel displays, has fallen sharply on a downgrade from Thomas Weisel and negative comments from Piper Jaffray. Competition and the potential of falling unit sales in the second half of 2006 were the primary reasons behind the concerns. Trident has also been caught up in the options back-dating scandal.
But, perhaps Trident has take too much of a beating in a falling stock market that takes any bad news badly.
Trident has been a grrowth engine. For its fiscal year ending June 30, 2005, Trident's revenue rose 31% to $69 million. Revenue for the June 30, 2005 quarter was $20.9 million and the company had an operating loss of $6.6 million. By the December 31, 2005 quarter revenue had nearly doubled from June to $40.6 million and operating profit hit $7.7 million. In the March 2006 quarter, revenue rose to $44.7 million and operating profit jumped to $8.6 million.
Trident has lost half of its market cap since April, although there is no evidence that the company is in trouble. Is there a chance that its business is slowing? Yes, but the final word will not be in on details of the company's growth until it announces the June 2006 quarter. What is obvious is that a stock that traded at over $31 less than three months ago is now at $16.20.
Trident's market cap is now $925 million for a company that will probably have revenue of over $210 million for the next fiscal year meaning that it trades at a little more than 4 times sales. The company also has $135 million of cash and short-term investments and no debt.
Trident's stock is down too far.
Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com. He does not own securities in companies he writes about.
But, perhaps Trident has take too much of a beating in a falling stock market that takes any bad news badly.
Trident has been a grrowth engine. For its fiscal year ending June 30, 2005, Trident's revenue rose 31% to $69 million. Revenue for the June 30, 2005 quarter was $20.9 million and the company had an operating loss of $6.6 million. By the December 31, 2005 quarter revenue had nearly doubled from June to $40.6 million and operating profit hit $7.7 million. In the March 2006 quarter, revenue rose to $44.7 million and operating profit jumped to $8.6 million.
Trident has lost half of its market cap since April, although there is no evidence that the company is in trouble. Is there a chance that its business is slowing? Yes, but the final word will not be in on details of the company's growth until it announces the June 2006 quarter. What is obvious is that a stock that traded at over $31 less than three months ago is now at $16.20.
Trident's market cap is now $925 million for a company that will probably have revenue of over $210 million for the next fiscal year meaning that it trades at a little more than 4 times sales. The company also has $135 million of cash and short-term investments and no debt.
Trident's stock is down too far.
Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com. He does not own securities in companies he writes about.
posted by douglas mcintyre at 10:11 AM
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