SSTI

[David Randolph]

Silicon Storage Technology, Inc. (SSTI). The Group's principal activity is to supply flash memory semiconductor devices. The Group offers these products to digital consumer, networking, wireless communications and Internet computing markets. The Group operates through four segments: Standard memory product group, Application specific product group, Special product group and Technology licensing. The major customers of the Group include Apple, Dell, Intel, LG Electronics, Motorola, Panasonic, Samsung, Sanyo, Siemens, Sony and others. The Group operates in the United States, Europe, Japan, Korea, Taiwan, China and other Asian countries.

The stock just crossed an analyst's price target:

«Silicon Storage popped 62 cents, or 18%, to close at $4.13 after analyst Daniel Amir raised his rating on the shares to buy from sell while setting a $5 price target for the stock.»

SSTI closed today at $5.14. It is a bullish factor that the stock is trading higher than a bullish price target set by an analyst, perhaps many people sold at the price target area and now they see the stock climb further and must jump back in, creating further advances in the price. Reading the motives behind the analyst call I believe he was too conservative on the price target: Silicon Storage spikes on upgrade - Apple deal among catalysts seen by WR Hambrecht

Results will be out tomorrow after the close. Guidance from the company isn't great:

«Second Quarter 2005 Outlook

SST expects its second quarter unit shipments to increase slightly from the first quarter. In addition, the company expects average selling prices to decline by four to six percent. Licensing revenue is expected to be down slightly from the prior quarter. Therefore, SST expects its second quarter revenues to be between $80 million and $90 million, assuming no drastic changes occur in the U.S. and international economies. Gross margin is expected to be between 11 and 15 percent, which takes into consideration the risks associated with market condition changes. Research and development spending is expected to be approximately 10 percent higher than the prior quarter. In addition, the company expects a $4 to $5 million charge as a result of the Actrans acquisition. With these revenue and expense levels, SST expects net loss per share to be between $0.20 and $0.28 in the second quarter.»

Yet the stock keeps rising prior to results and the trend has turned bullish again:



I guess this baby will pop on earnings. Expectations are low so there's only one way if we get some of a positive surprise, and that is way up !

I've decided to buy SSTI for the 3 Stocks on Fire Portfolio at today's open.

3 Stocks on Fire Community take on SSTI

This analysis is part of Top 5 Stocks for Tuesday, conducted by David Randolph from 3 Stocks on Fire. David Randolph is managing a public and diversified portfolio which is up 144% since May 2005.

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[oicpecnoc]

Earnings appear to have been leaked a little early, if a post on the yahoo board is correct.  Opportunity to evaluate before the bell.  Looks good, but stock appears to be stagnant at this point.  Good luck to all. 

[puenthouse]

Looks like alot of the guys do not like the earnings on this.  I got in.   With the time difference being over here, i guess they are conducting the earnings call now.  Should be interesting

[puenthouse]

Is yahoo the reason why the recent jump then?

[oicpecnoc]

Earnings on on their web site.  I got in this morning at 5.20, about where it seems to want to stay right now.  Forcasted loss in q3 for .11 to .15 cents, which is from what I can tell in this short period a big improvemnet.  Most don't seem overly impressed at this early stage, although its rising with every letter I type.

[puenthouse]

David, what are your positions on this one?  At 330 pm back in the states this thing is shooting up and down.

[oicpecnoc]

The age old question.  Buy or Sell?   

[Igaryok]

Crashing on earnings news.

[oicpecnoc]

David,

Since #'s came out before the bell, curious what you think you would have done with the information had you been inclined to be in a decision making mood.  I chose to stay, clearly at this point the wrong choice.  Had many opportunities to sell between 5.10-5.40.

From a traders point of view, would you have liked the numbers well enough to take a wait and see approach, which is what I did.

I will give you 4 experiences in the last 3-5 months that lead me to think holding on earnings rumors is really stupid, even though you can land the motherload on occasion.

1)  INCX  met their own guidance numbers, missed analyst #'s, and added to R and D, resulting is crappy guidance.  Stock absolutely tanked as fast as any in recent memory AH and the next day. 

2)  SYNA- absolutely blew the ceiling off on earnings, but whispered IPOD sales might be slowing and it got destroyed.

3)  GIGM- you know the story there.

4)  Now SSTI.

Anybody with any warm and fuzzy hold into earnings stories please post so that I can be assured that at least on occasion stocks do go up after an earnings report. 

[blueman]

I bought SNDK @23.6 on stocky recommendation and kept half through ER. I was handsomely rewarded. SNDK was up 12% after earning and is still going strong @33.38.

[puenthouse]

So I dont see any sells here, but I assume this is what you guys are doing. right? 

[usedcasting]

Why no comments before openning bell?

[David Randolph]

Easy usedcasting, I'm running against time here, but there's always an update before the opening bell 

SSTI's results were better than expected. Read my initial analysis:

«SST expects its second quarter revenues to be between $80 million and $90 million» - «Net revenues for the second quarter were $93.3 million»

«SST expects net loss per share to be between $0.20 and $0.28 in the second quarter» - «Net loss for the second quarter of 2005 was $19.6 million, or a loss of $0.19 per share»

But of course, when you get a title like this on the news: «Silicon Storage Tech swings to quarterly loss» and with this content «Silicon Storgae Technology Inc. (SSTI) on Tuesday reported a net loss of $19.6 million, or 19 cents a share, vs. net earnings of $22.1 million, or 22 cents a share, in the year-ago period. Revenue was $93.3 million, compared with $128.5 million last year. The company forecast a third-quarter net loss in the range of 11 cents to 15 cents a share, on revenue of $103 million to $113 million.», and some people with good profits on their hands, they sell first and think later.

The leak in results before the bell probably caused the sell off too.

Anyway, results were above expectations and the future seems bright. I'll hold the stock as long as it maintains its uptrend. The uptrend line today will stand at $4.60, so I'm giving the stock a lot of space to maneuver.

[usedcasting]

David, sorry about the tone of my post, no excuse, I got nervious, won't let it happen again. 

[puenthouse]

due to no advise last night, and to allow me to sleep I put a .07 trail stop so that if it just dropped today, i would make out alright, but it looks like it came back and im still on for the ride.  GL