3SOF

Applaud. Thanks David.

update:
1)
SILC: Merriman Ups to Buy from Neutral; Analyst Notes
Monday , October 29, 2007 13:04ET
Issuer: Silicom Ltd (NasdaqSC: SILC)
Analyst Firm:  Merriman Curhan Ford & Co.
Ratings Action: UPGRADE
Current Rating: Buy (from Neutral)
Analyst Comments: The firm's upgrade is based on the company's strong profitability in 3Q07, an expected rebound in growth from the company's bypass card revenue after a 17% sequential decline caused by inventory digestion and an inexpensive valuation. They believe Silicom has not lost any share in the WAN optimization appliance market and view the 3Q07 drop in revenue from the company's bypass card line as a temporary setback due to inventory
digestion and order timing.

2)
Silicom falls after 3Q results; Merriman Curhan sees 'opportunity' in stock
Monday , October 29, 2007 16:16ET

By Staff Reporter

BOSTON, Oct 30, 2007 (Thomson Financial via COMTEX) -- Shares of Silicom Ltd. fell Monday after the Kfar-Sava, Israel-based networking and communications devices manufacturer reported third-quarter results that disappointed some analysts.

The company reported ahead of Monday's open net income of $1.6 million, or 25 cents a share, up from $666,000, or 13 cents a share in the year-earlier period, amid a 59% increase in revenue to $6.6 million.

Two analysts surveyed by Thomson Financial has estimated earnings of 24 to 27 cents a share, for an average of 26 cents a share, on revenue of $7 million to $7.34 million..

Shares fell 8% to $17.58 on volume of 534,000. The issue's 30-day average volume is 209,600.

Despite the weaker-than-expected results, Merriman Curhan Ford & Co. upgraded Silicom to buy from neutral saying that a 17% sequential decline in the company's bypass card revenue is a "temporary setback due to inventory digestion and order timing from the wide-area network optimization original equipment manufacturers."

The company's bypass card revenue fell to $3.3 million from $4 million in the second quarter, which Merriman believes was a result of large order placed earlier in the year that caused inventory correction in the most recent quarter. "We view the setback in the current quarter as an opportunity for an inexpensive entry point to a highly profitable and potentially rapidly growing company," said analyst David Duley.

3)
Chart:

Damn it, the conference call replay still isn't available in SILC's website. But, judging from the analysts recommendations la-onda brought us the call was fine.

According to the following ...

QuoteDespite the weaker-than-expected results, Merriman Curhan Ford & Co. upgraded Silicom to buy from neutral saying that a 17% sequential decline in the company's bypass card revenue is a "temporary setback due to inventory digestion and order timing from the wide-area network optimization original equipment manufacturers."

The company's bypass card revenue fell to $3.3 million from $4 million in the second quarter, which Merriman believes was a result of large order placed earlier in the year that caused inventory correction in the most recent quarter. "We view the setback in the current quarter as an opportunity for an inexpensive entry point to a highly profitable and potentially rapidly growing company," said analyst David Duley.

... we've had the "revenue fluctuation" the CEO had warned it would inevitably happen in one quarter or another, not compromising growth prospects.

With $0.25 EPS in Q3 2007 I would say the stock is trading at about 17.5 times earnings, which is cheap, given its historical growth rate and prospects.

However, I see a few "negatives" when I compare reality with the expectations I had when I initially recommended this stock, namely:

1 - The share count grew 25% over the past 12 months, which is quite a lot:



2 - Analysts are forecasting just 23% revenue growth in 2008;

3 - The tax rate in Q3 2007 was just 5.5% and in the nine months so far in 2007 it was just 5.88%. I don't think this will last forever, and when the company passes the "incentive tax period" I think net profit margin will be hit.

So, if I derive more "conservative" estimates, the stock looks fairly valued and should go up about 16% a year going forward, which is attractive, but not enough for the Main Portfolio and its long term goal of a 30% average annual return:



My conclusion is that SILC is attractive at this point and it will surely bounce nicely from the $17 support level, but I'm not going to buy it because I think I can do better if I work harder towards finding the best long term investments for the Main Portfolio.

Good luck if you own it

from seeking alpha:

Silicom Selloff Overdone; Expecting Quick Recovery
posted on: November 27, 2007 | about stocks: SILC   
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Silicom Ltd. is a company that has experienced strong growth over the last couple of years but has sold off recently after a flat quarter. I think the drop in share price has been way overdone and now would be a good time to buy some shares.

Silicom Ltd. engages in the design, manufacture, marketing, and support of connectivity solutions for a range of servers and server-based systems in Israel, the United States, and internationally. It primarily manufactures server networking cards with and without bypass (Server Adapters), and legacy products, including connectivity solutions for portable personal computers and broadband Internet access products.

The company's revenue and net income have been growing quickly over the last year with the exception of last quarter which was essentially flat (see chart below).

In the conference call for Q3 07 the CEO of Silicom Ltd. said purchases can vary from quarter to quarter so the flat results last quarter are not indicative of a trend. He also stated he is optimistic about future growth.

I don't think the results Silicom Ltd. reported last quarter merited such a huge sell off (the stock is off 50% from its yearly high). However, I think the overreaction provides a nice buying opportunity.

The stock price of Silicom Ltd. has found support and is starting to rebound. The stock is also trading at a nice valuation (trailing PE of 15). If Silicom Ltd. can continue to show growth like they have in the last couple of years the stock price will quickly recover.

QuoteI don't think the results Silicom Ltd. reported last quarter merited such a huge sell off (the stock is off 50% from its yearly high). However, I think the overreaction provides a nice buying opportunity.

The stock price of Silicom Ltd. has found support and is starting to rebound. The stock is also trading at a nice valuation (trailing PE of 15). If Silicom Ltd. can continue to show growth like they have in the last couple of years the stock price will quickly recover.

I agree with this Seeking Alpha analysis la-onda. I just wonder if there won't be a further sell off to close that gap at $10:

SILC would be a wonderful buy at $10. I wonder if the market will be inefficient enough to take it that low.

Quote from: David Randolph on January 08, 2008, 07:56:31 AM
SILC would be a wonderful buy at $10. I wonder if the market will be inefficient enough to take it that low.

Indeed.

At $10 SILC will be a fast growing technology company, uncorrelated with the economic cycle, trading at 10 times earnings. But since the market is about to open with a "crash feeling", I'll be even more demanding and will try to buy SILC between $9 and $9.5.

I've been waiting for this opportunity for a long time and wish the timing is right, since at this price I have no doubts about the attractiveness of the fundamentals.

The Trading Plan is:

Buy SILC between $9 and $9.50. 6.66% of capital as usual.

Note: If it doesn't reach $9-$9.50 today I'll wait a few more days, it seems something just happened in the market and they wont open as low ... what was it?

Fed cuts interest rates by 75 basis points

0.75% rate reduction!

Silicom's Fourth Quarter and Full Year 2007 Results Release Scheduled for January 28
Monday , January 21, 2008 03:18ET

KFAR SAVA, Israel, Jan 21, 2008 (BUSINESS WIRE) -- Silicom Ltd. (NASDAQ:SILC) (TASE:SILC), an industry-leading provider of high-performance server/appliances networking solutions, announced that it will be releasing its fourth quarter and full year 2007 results on Monday, January 28th, 2008, before the US market opens.

nice call David!

Quotenice call David!

We'll see about that la-onda

SILC will report earnings shortly:

• Silicom's Fourth Quarter and Full Year 2007 Results Release Scheduled for January 28
Business Wire (Mon 3:19am)

Actually it will report on my birthday, I hope SILC gives me a nice birthday present

The one analyst covering the stock expects $0.25 EPS for the quarter, the same as it was in Q2 and Q3:



As for 2008, he expects $1.10 EPS, so SILC is trading at 9 times forward earnings. I actually think SILC will grow more than this, but it's good to see expectations are contained and the stock is this cheap.

In fact, a 1 cent miss in one single quarter (even though management previously warned several times that there would be quarterly fluctuations) made the stock tank 61% in just three months:



Instead of getting angry because the market is so inefficient and moves so wildly over the short term, I need to adapt and take advantage of this. But I still don't know how to do it. Well,  this SILC trade seems to be a step in the right direction ... I thought the stock was cheap at $15 but opted to wait until it was a deep bargain to buy it ... also waited for the right timing from a technical perspective. We'll see if it was a good move.

so fare so good 

Quote from: la-onda on January 24, 2008, 08:31:18 PM
so fare so good 

Yep, 4th quarter results will be out Monday before the open and I'll hold through them.

up 20% pre-market


Silicom's Momentum Continues: Achieves Record Results for Q4 & 2007
Monday January 28, 8:15 am ET
- Q4- $7.5M Revenues, $1.8M Net Profit, 22% Operating Margin -
- 2007- $26.8M Revenues, $1.00 EPS -

KFAR SAVA, Israel--(BUSINESS WIRE)--Silicom Ltd. (NASDAQ:SILC - News)(TASE:SILC) today reported record results for the fourth quarter and twelve months ended December 31, 2007.

ADVERTISEMENT
Revenues for the fourth quarter of 2007 increased by 49% to $7.5 million compared with $5.0 million for the fourth quarter of 2006. These are the Company's highest quarterly revenues on record, and represent 13% sequential growth compared to the third quarter of 2007. Net income for the period increased by 71% to $1.8 million, or $0.27 per diluted share ($0.28 per basic share), compared to $1.1 million, or $0.20 per diluted share ($0.21 per basic share), for the fourth quarter of 2006. Operating margin for the quarter increased to 22% compared with 19% for the fourth quarter of 2006.

Revenues for 2007 increased by 66% to $26.8 million compared with $16.1 million for 2006. These are the Company's highest annual revenues on record. Net income for 2007 increased by 142% to $6.3 million, or $1.00 per diluted share ($1.03 per basic share), compared with $2.6 million, or $0.49 per diluted share ($0.51 per basic share), for 2006. Operating margin for the year increased to 21%, compared with 15% for 2006.

As of the end of 2007, the Company's cash and equivalents totaled $32.9 million, compared with $9.3 million at the end of 2006.

Commenting on the results, Shaike Orbach, President and CEO, said, "We are proud to report the strongest quarter and year in our history, both of which set new records in terms of revenues, operating profit and net income. These exciting results are being driven by the accelerated growth of our target WAN Optimization, Security and other Network Appliances markets, which continue to exhibit strong demand for our advanced multi-port connectivity and BYPASS products; moreover, we have been growing faster than our target markets through our success at expanding our business with existing customers while continuing to achieve new design wins."

Mr. Orbach continued, "We are particularly pleased to record a steady rise in our operating margin to its current level of 21%, a demonstration of the leverage inherent in our business model. Having accumulated a total of more than 50 Design Wins in a variety of market segments for the full range of our products, we are not dependent upon any single market segment, and feel well positioned to continue delivering growth in the future."

Thanks for posting the results Se7en

• Silicom's Momentum Continues: Achieves Record Results for Q4 & 2007
Business Wire (Mon 8:15am)

SILC's fundamentals continue to improve, so the slide from almost $30 to below $10 was just due to an earnings multiple contraction.

I notice the stock up strongly in the pre-market, however I also noticed that insiders have prepared themselves to unload some shares on the good news:

http://www.sec.gov/Archives/edgar/data/916793/000117891308000205/zk84756.htm

«Silicom Ltd. (the "Registrant") held an Extraordinary General Meeting of Shareholders on January 24, 2008 at 10:00 a.m. Israel time (adjourned from January 17, 2008) at the Registrant's offices at 8 Hanagar Street, Kfar Sava 44000, Israel. Copies of the Notice of Extraordinary General Meeting, Proxy Statement (including Exhibits A and B thereto) and Proxy Card relating to the Meeting were filed on Form 6-K by the Registrant on December 13, 2007. The Registrant is announcing that the resolutions relating to: (i) the replacement of the Registrant's Articles of Association; (ii) severance arrangements for the Registrant's Active Chairman of the Board of Directors; (iii) severance arrangements for the Registrant's President and Chief Executive Officer; (iv) option grants to the Registrant's Active Chairman of the Board of Directors; (v) option grants to the Registrant's President and Chief Executive Officer; and (vi) authorization of a new form of indemnification agreement for the Registrant's officers and directors, were duly passed at the Meeting.»

I'll try to take profits around $13.3 for a 40% profit (also the 50 days SMA stands at $13.35). If we break $12 on the downside before this happens I'll also SELL. I'm tired of watching my profits slip. I won't allow it this time.

(but hey, don't you go putting orders in the pre-market and damage the momentum)

Maybe the orders around $13.3 didn't allow the stock to go up to that point, since the high of the day was $13.26.

As I was writing now the stock broke down below $13 ... feel free to sell now if you wish.

I'll have to put the selling price according to the trading plan posted above.