posted
I shorted this afterhours yesterday at $29 and loaded some more at $28.90 this morning. If you do DD on this you will see over time this probably hits at least $21-$22. I also bought $30 august puts for $2.50
Here is some DD:
Credit Suisse report, Reiterated their UNDERPERFORM this am. $18 target. Said numbers have to come down. They are now at $1.34 for 08, $1.40 for 09.
Will we see low 20's? Highly likely. I listened to the CC completely and reviewed the presentation slides. It's very negative IMO. Here are several points that I have: Outlook is weak: 1. Soft consumer spending, tighter credits, etc. 2. Overall slowdown in the semi-capex industry. 3. Q3 light source demand is lower. 4. Revenue will be down 8% - 10% from Q2 5. Lower gross margin of 45% 6. R&D Capex of 26M - 27M 7. SG&A expenses increase to 16.5M to 17M 8. Effective tax rate increases to 41% for Q3, but 37% yearly. 9. From Slide # 15, Cash decreased 46M to $300M; Inventory increased to $174M from 153M. 10. Working Capital decreased from 367M to 357M (not good!). 11. Return on Invested Capital decreased from 9% to 8% (not favorable!) 12. Return on Assets also decreased from 6% to 5% (Not good!). 13. The quantity of light sources shipped decreased from quarter to quarter for the last 5 Q's: Q4'07 was 49. Q1'08 was 31, and Q2'08 only 29. 14. Total revenue has continued to go down from 130's and 140M to 124M in Q1 and Q2'08. Even 8 - 10% lower for Q3'08.
15. Based on the data presented, I calculated the net income for Q3 to be 1c to 4c as compared to 34c estimate. See my next post on how I came up with the numbers.
This is much worst than I thought initially. No wonder why they reported revenue guidance, but not the net income guidance. Here is how I came out with the numbers: Please see the report, and the Conference Call slides, particularly, slide # 16 (Financial Highlights). Q3 revenue will be down 8 - 10% from Q2: 111.6M to 114.08M. GM = 45% (down from 48.9% in Q2). R&D: 26M - 27M (Take 26.5M = 23% to 24% Revenue). SG&A goes up to 16.5M to 17.0M (Use average of 16.75M = 15% Revenue). Now, the OPERATING MARGIN = GM - R&D - SG&A = 6% to 7%. From slide # 16, the NET Margin is ~ 6% below the OPERATING Margin for the last 6 quarters (Q2'07 to Q2'08). Therefore, the estimated Net Margin 0.0% to 1.0% of Revenue. Based on 30.4M shares outstanding, I got $0.01 to $0.04 net income or 1c to 4c. This is very ugly compared to 34c consensus. If daytraders are shorting CYMI, we might see teens like OSTK, TTEC, etc. Do your DD's and let me know if you have any opinion or comments.
Then here is my take.. New day low, you can tell by the way this is trading and the volume that this is a major dump and I really dont think you will see any buyers soon. The company for the first 6 months has .88 in earnings diluted, and the 3rd and 4th quarter will be dismal with revenue and earnings drop. Earnings for Q3 will be close to baseline or maybe even negative. Lets just be nice and give next 6 months earnings at .50 diluted, you get $1.38EPS for a company with loss of revenues and earnings. Put the industry P/E of 17 (doesnt deserve this) and you have $23.46
But these estimates are conservative and most likely yearly earnings come in at $1.20 with a P/E of like 13..you have $15.60
-------------------- Disclaimer: Not accountable for anything I say Posts: 6266 | Registered: Jun 2004
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