SIRF

[la-onda]

David, how about SIRF?

from Changewave:

NEW RECOMMENDATION: SIRF TECHNOLOGY

Before we get into my final new recommendation, I have just one question for all the WaveRiders out there: Do you know where you're going?

There are a lot more people who can say "yes" to that question thanks to the spread of personal navigational devices (PNDs), a not-too-fancy term for the rapidly growing GPS market.

GPS is the acronym for "global positioning system" -- a system of at least 24 medium-orbit satellites orbiting the earth (there are currently 31 circling the globe today) that transmit signals that allow GPS receivers to calculate location, speed, direction and time.

These functions go beyond the "telematics" services like OnStar -- which is pretty slick -- because there is so much more potential when you can untether it from your ride.

Just imagine walking around the Big Apple, opening your smartphone and being able to locate your "posse" on a map of the city. Then suppose you could click on the map to get everyone on a conference call to make plans for the evening?

Or, what if you could be automatically messaged and offered a coupon for a 25% discount at a restaurant or store because you're registered as a loyal customer and your GPS-enabled devices shows you are in the area.

So this technology -- crammed into a box the size of a couple of CD cases -- can go much further than just helping you find precise directions to your destination, whether traveling from your home to visit friends or to the hot, new restaurant in town you want to try.

Even though you have companies like Google (GOOG) working to use cell phone tower signals to pinpoint locations, they will have trouble rivaling the accuracy of GPS, which can pinpoint a location to within 3 meters or about 10 feet. Given the ability of these devices to eliminate maps and a good deal of the uncertainty and stress that come with travel in unfamiliar areas, they are not only time savers, but marriage and relationship savers, too.

Once upon a time, GPS technology was limited to military uses, but the opening of GPS signals to consumers was initiated in the 1980s and uses expanded from surveyors and scientific applications to use in portable units and automobiles.

And that's where this technology begins to ride the S-curve of growth to mass adoption as "location-based services" -- where GPS functions are integrated into devices like cell phones and cars via real-world applications -- become a part of our daily lives. The opportunity here is massive because navigation systems are in less than 10% of cars on the road, and wireless handset makers are just beginning to implement the technology in their products. (Another signal this market is hot came in the form of Nokia's (NOK) $8.1-billion offer for digital mapmaker Navteq.)

Location-based services are a drop in the bucket now, but according to IDC, the U.S. market for these applications will grow to $3.2 billion by 2010. This is the kind of wave we like to ride at ChangeWave Investing, and I want to recommend the little chip company that put the dominant GPS players like Garmin (GRMN) and TomTom on the map.

SiRF Technology Holdings (SIRF) is the company and you have to like its credentials, especially when it has a 75% share of the GPS chip market.

SIRF is the best way to ride the Personal Navigation Wave as GPS-based services come to more and more of our favorite consumer electronics -- especially our cell phones.


SIRF'S UP, CATCH THE WAVE

In a season when there are few must-have items in the consumer electronics universe, GPS units stand out.

About 28% of the early adopters in our ChangeWave Alliance own GPS units right now, and according to two surveys we did this fall on consumer and corporate demand for GPS units and services, demand is not about to wane.

As a matter of fact, our Alliance findings point to a big jump in consumer demand -- especially during this holiday season. In the next 90 days, 11% of our Alliance members said that they would be buying a portable GPS device, a number that is double the findings we saw just one month ago.

This data is in line with other research we've seen on GPS, and there's more to this than just the mobile phone play, which is not too shabby at an expected compound annual growth rate of about 40% through 2011. The opportunity in the mobile personal navigation market is estimated to jump from 25 billion units worth $7.5 billion this year to $67 billion in 2010, according to CIBC World Markets analyst Yair Reiner.

So why this play, and why now? Well, all the services and functionality that will help you find the information you need is spreading from the select few to the masses.

GPS personal navigation services are spreading from high-end devices and cars and headed to a smartphone, laptop, car or truck near you. And while some of the current generation devices offer these functions, they will be must-haves for the next wave of devices in the BlackBerry, iPhone and Treo lines not just in the United States, but around the world.

SIRF had a tremendous run-up earlier this year, but a pull back of around 26% from its February high of just over $34, is giving us an opportunity to get in at a better price. SIRF is trading around 20-times estimated 2008 earnings and sales growth forecasts are cautiously optimistic at 30% for 2007, and 37% for 2008. Obviously, I expect them to do better than that.

We're getting a great opportunity to grab one of the acknowledged leaders in a rapidly growing space at a discount. What more could you want? (Just wait until the sales figures come in for the holidays to see how fast this one moves.)

Buy SiRF Technology Holdings (SIRF) for your Emerging Game-Over Dominator portfolio up to $27.50 with a target of $60. The Strong Buy Under price is $25 and the Accumulate price is $30.

[BigSully1]

Big dump on poor ER.

[David Randolph]

Buy SiRF Technology Holdings (SIRF) for your Emerging Game-Over Dominator portfolio up to $27.50 with a target of $60. The Strong Buy Under price is $25 and the Accumulate price is $30.

I wonder how strong is ChangeWave's buy at $7 now

SIRF is very volatile, since it jumped to $30 in late October and then it fell to about $7 in early February. Let's check the news impacting both extreme moves:

October's news:

• Sirf Tech Tops Estimates
TheStreet.com (Tue, Oct 30)

«Excluding the acquisition charges, as well as stock option compensation charges, Sirf said it earned 29 cents a share. Analysts polled by Thomson Financial were looking for 22 cents a share.»

February's news:

Sirf Tech Misses Estimates

«Sirf said its net income in the fourth quarter was $717,000, or a penny a share, vs. $9.1 million, or 16 cents a share at this time last year. Sirf's results included about $7 million in acquisition related charges.

Excluding those charges, Sirf said it earned 28 cents a share, 4 cents shy of the average analyst expectation of 32 cents.»

Let's see what these guys say:

• SiRF Is Scrambled
at Motley Fool (Tue, Feb 5)

• After SIRF's Pounding, the Stock Is Dirt-Cheap
RealMoney by TheStreet.com (Wed, Feb 6)

I don't know SIRF well enough, but at first sight it seems to me that it is a one trick pony, making chips for GPS navigation devices. It reminds me of SIGM, which makes chips for IPTV set top boxes. Another example of this type of company is NVTL, which makes the little "antennas" for us to have mobile internet in laptops.

The common thing about these technology companies is that investors love them while they're a novelty, but when the innovation isn't so cool anymore ... when it becomes widely known ... multiples contract a lot, whether it is because of lower profit margins due to competition or because there's a threat of a more innovative "innovation".

I guess that to pick these stocks right one should read those technology magazines and find the new waves early in the process. Then sell them when the products start to reach maturity or competition kicks in.

Anyway, SIRF can be cheap now, but I would see any recovery as a correction of the undervaluation, not as a new long term cycle of growth.

There's a lot more to fundamental analysis than valuation metrics. Or it would be easy, and it isn't.